Heterodox
In the wake of the financial crisis, new regulations on bank capital and stress tests strengthened the ability of the major U.S. financial institutions to withstand shocks. The Trump administration’s plans to weaken capital requirements threaten to undo these gains. If they go forward, the financial system could again be dangerously vulnerable.The right amount of capital is a question of insurance: how much output to sacrifice in return for reducing the expected loss from a crisis. Equity...
Read More »