The public has no idea how unsure regulators are about the rules they lay down for the banks they regulate. No one has a standard that makes common sense to all concerned.
What securities, for example, should make up a bank’s net assets? Are a government’s bonds really safe if that government is on the verge of bankruptcy? What should measure a bank’s liquidity during a financial emergency?
My argument with bank regulators: Allowing mark-to-market accounting during the 2008-09 financial meltdown, when daily bank net worth was marked down simply because there was no real market to determine those bank asset values. Securities market short-sellers were therefore able to take advantage of the unreal lower values that resulted. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)
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