Rover the regulator

Simple rules may be best for monitoring banks

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Readers' comments



I agree with Haldane that " simpler is better." The proliferation of complex rules and regulations plays into the banks hands, as their lobbyists are well aware. As well as returning to the " Glass-Steagal " rules, I would offer another simplification. Once banks are no longer too big to fail, simply let them fail. The depositors are protected by the F.D.I.C. in the U.S., and the shareholders and management would move on to a better business model in their next bank.


You write, "How is an outside supervisor to manage, particularly when the best and brightest of its staff can be lured away by the higher salaries on offer in the City or on Wall Street?" That seems an odd statement. If a member of "the best and the brightest" chose to become a supervisor, presumably it wasn't for the salary. Is your statement based a general rule? A rule which justifies, for example, this statement: "How is a financial newspaper to mange, particularly when the best and brightest of its staff can be lured away the higher salaries on offer in the City..."?

Richard Hancock

Buttonwood wrote: "The simple rule that Mr Haldane suggests for regulators is to look at the “leverage ratio”, the relationship between a bank’s equity capital and the assets on its balance-sheet. (A bank’s assets are, largely, the loans it makes; customer deposits count as liabilities.) A low leverage ratio is (counterintuitively) a bad thing: if a bank’s loans turn bad, there is more risk that its equity will be wiped out."

Isn't the leverage ratio the ratio of assets to equity capital (see, for example, http://www.wikinvest.com/metric/Financial_Leverage_Ratio)? In which case, a low leverage ratio *is* (intuitively) a good thing (i.e. fewer loans for a given amount of equity capital).


30,000 pages? The banks, and indirectly taxpayers, will now end up enriching not only bankers, but laywers as well.

hedgefundguy in reply to edwardong

This is the banks doing.

Remember, Dodd-Frank is just a broad law for the regulatory enviroment.

Regulators and bank lawyers, etc., are still negotiating the actual individual rules.

Buttonwood doesn't tell us how outgunned the regulators are (30:1 ?) or what percent of D-F is enacted.




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