Capital Non A Lost Cause?

Admati in addition to Hellwig (my review here) (and swain travelers) may hold out having closed to effect! From today's WSJ "Heard on the Street":

There is growing beak amid regulators, for example, of forcing banks to number a minimum sum of long-term debt, cap the size of their short-term liabilities or confine activities that tin hold out conducted inside regulated banking concern subsidiaries.

At the same time, regulators look to hold out focusing to a greater extent than on the take away to pre-emptively address potential systemic risks.

Any such moves could farther constrain banks' might to juice returns through leverage acre too limiting lucrative activities that autumn exterior a traditional lending function. That could subdue turn a profit increase already hampered past times the superlow interest-rate environment.

The danger isn't lost on banks themselves. Influenza A virus subtype H5N1 number of banking groups lately joined together inwards a world drive to rebut notions of a big-bank borrowing subsidy.”

OK, three out of iv ain't bad. Admati in addition to Hellwig (and I) accept a dim thought of property peril rule in addition to the peril that regulators conduct keep whatever promise of seeing bubbles emerge. But to a greater extent than capital, in addition to to a greater extent than people agreement that leverage in addition to TBTF is a subsidy to banks, in addition to therefore banks are forced to manage most it... that's progress.