http://www.capital-flow-watch.net/2010/07/17/why-dodd-frank-wont-bring-prosperity/ Conservative economic commentary from the top-down Tue, 18 Oct 2011 09:51:36 -0400 http://wordpress.org/?v=2.9.1 hourly 1 http://www.capital-flow-watch.net/2010/07/17/why-dodd-frank-wont-bring-prosperity/#comment-12784 John Schroy Wed, 05 Jan 2011 20:28:35 +0000 http://www.capital-flow-watch.net/?p=4747#comment-12784 It's not necessary nor wise to increase bank leverage beyond a certain point. However, in order to serve the largest clients, banks must have substantial assets. The safe way to achieve this is to raise capital. However, bankers of major institutions, don't own the banks they run; they're only employees paid exorbitant bonuses based on profits. By increasing leverage, they can increase their bonuses, although putting the bank at risk in the process. Regulators should keep leverage at prudent levels, but, unfortunately, most are either ignorant of the risks involved or have been seduced to do otherwise by these employee-bankers. It’s not necessary nor wise to increase bank leverage beyond a certain point. However, in order to serve the largest clients, banks must have substantial assets. The safe way to achieve this is to raise capital. However, bankers of major institutions, don’t own the banks they run; they’re only employees paid exorbitant bonuses based on profits. By increasing leverage, they can increase their bonuses, although putting the bank at risk in the process. Regulators should keep leverage at prudent levels, but, unfortunately, most are either ignorant of the risks involved or have been seduced to do otherwise by these employee-bankers.

]]> http://www.capital-flow-watch.net/2010/07/17/why-dodd-frank-wont-bring-prosperity/#comment-12537 Gary Anderson Mon, 27 Dec 2010 18:15:46 +0000 http://www.capital-flow-watch.net/?p=4747#comment-12537 I am wondering why it is necessary to cancel out the Volcker rule and allow massive leveraging of the banks? Won't this just drive up commodity prices and also allow moral hazard and easy money to flow again? Is easy money flowing the only way Wall Street can be a major player in world finance? If so maybe we shouldn't be playing. I am wondering why it is necessary to cancel out the Volcker rule and allow massive leveraging of the banks? Won’t this just drive up commodity prices and also allow moral hazard and easy money to flow again? Is easy money flowing the only way Wall Street can be a major player in world finance? If so maybe we shouldn’t be playing.

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