(DOWNLOAD) "Financial Innovation, Regulation, And Reform (Report)" by The Cato Journal # eBook PDF Kindle ePub Free
eBook details
- Title: Financial Innovation, Regulation, And Reform (Report)
- Author : The Cato Journal
- Release Date : January 01, 2009
- Genre: Politics & Current Events,Books,
- Pages : * pages
- Size : 282 KB
Description
Financial innovations often respond to regulation by sidestepping regulatory restrictions that would otherwise limit activities in which people wish to engage. Securitization of loans (e.g., credit card receivables, or subprime residential mortgages) is often portrayed, correctly, as having arisen in part as a means of "arbitraging" regulatory capital requirements by booking assets off the balance sheets of regulated banks. Originators of the loans were able to maintain lower equity capital against those loans than they otherwise would have needed to maintain if the loans had been placed on their balance sheets. (1) Capital regulation of securitization invited this form of off-balance-sheet regulatory arbitrage, and did so quite consciously. Several of the capital requirement rules for the treatment of securitized assets originated by banks, and for the debts issued by those conduits and held or guaranteed by banks, were specifically and consciously designed to permit banks to allocate less capital against their risks if they had been held on their balance sheets (Calomiris 2008a). Critics of these capital regulations have rightly pointed to these capital requirements as having contributed to the subprime crisis by permitting banks to maintain insufficient amounts of equity capital per unit of risk undertaken in their subprime holdings.
 "Financial Innovation, Regulation, And Reform (Report)" by The Cato Journal # eBook PDF Kindle ePub Free){kind=link}