Tuesday, October 27, 2015

Meaningless Bank Regulations

                    
Further to my previous comments about U.S. government regulation of banks with the Dodd-Frank Act, I have an observation that differs a good deal from much of media comments. (I speak as a former senior bank analyst for a major Wall Street firm.)
                       
The banks have added substantially to capital in recent years, as advised by domestic and international banking regulators. All those strengthening actions will mean nothing if banks are forced to mark their assets to the market on a daily basis, as was the case during the 2008-09 financial debacle. You cannot price illiquid assets during a financial meltdown. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

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