November 11, 2009

In order to keep the lights on you need to reduce capital requirements

Sir Daniel Schäfer in “Keeping the lights on” November 11, writes “Bankers say that there is a time bomb ticking that could explode next year, when banks, already under pressure to deleverage, may be tempted to cut credit commitments on the back of companies presumably dire 2009 results”.
It is precisely because of that highly countercyclical “pressure to deleverage” that I am begging for the financial regulators to urgently decrease the capital requirements for all those BB+ or lower rated, or unrated, and that having in no way been the source of this crisis are now the most castigated by the need to rebuild the equity of the banks.