Wednesday, October 09, 2013

Capital – some good news on banking

Capital – some good news on banking "Five years after the Lehman Brothers collapse, a study shows that the regulators’ medicine is working

The banking crisis had many causes, some of which are complex enough to make a quantum physicist’s head spin. But a central cause is simple: banks relied far too much on debt to fund their activities – they used too much leverage. That’s why a new study, quietly released by the Bank for International Settlements almost exactly five years after Lehman Brothers collapsed, makes for encouraging reading. It suggests that attempts to reduce leverage are paying off. The regulators’ medicine is working – and with fewer side-effects than feared."

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