US/UK: Separated by a Common Financial Crisis

Want to understand how utterly corrupted the US has become by its own banks?

Consider the regulatory difference between the United States and Britain — whom Jesse Eisinger describes as “two countries separated by a common financial crisis.”

“[In the UK], major government figures speak openly about requiring substantially higher bank capital. The governor of the Bank of England, the head of the Financial Services Authority (the equivalent of the Securities and Exchange Commission) and even the conservative chancellor of the Exchequer have backed a bigger crackdown on the banking sector. While the international banking rules, called Basel III, settled on 7 percent as the minimum standard for a certain kind of capital, it’s acceptable in Britain to talk about having significantly higher standards. A recent Bank of England paper contemplated capital on the order of 15 to 20 percent.

Here, that thought is restricted to cranks and university professors . . .”

My shorter version of what Jesse is saying:

-The banks own Congress
-Regulators have long been captured
-7% capital reserves = 14 to 1 leverage is unacceptable to banks (pre-crisis levels used to be 12 to 1 before waivers were granted)
-The Obama White House, tainted by Robert Rubin pro-bank staffing recommendations, missed their window to really fix what is broken on Wall Street.
-Another major financial crisis is inevitable

Go read the full article . . .



In Debate Over Bank Capital Regulation, a Trans-Atlantic Gulf
March 30, 2011, 4:24 pm The Trade

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