Forbes (May 5, 2013)
Urging financial institutions to adopt one-size fits all risk models has can be disastrous. “We have real-life proof of the folly in this kind of forced uniformity: the Basel Accords. For years regulators around the world have been concocting uniform risk assessments to judge bank loans. The results of this exercise have been disastrous. Banks had to hold no reserves against government debt yet hold hefty set-asides for business loans. Greek government bonds were seen as infinitely safer than a loan to, say, IBM. Mortgage-backed securities also got preferred regulatory treatment–and we all know where that led.”
Tags: Banks, Basel Accord, Government debt, Loans, Mortgage-backed securities, Regulators, Reserves, Uniform risk assessment
Forbes (February 5)
“The U.S. Justice Department announced plans to file civil fraud charges against Standard & Poor’s (S&P) relating to the atrocious ratings that Standard & Poor’s gave to toxic subprime mortgage-backed securities…. This is a welcome—if long overdue—development for investors who have been waiting for years for the Feds to take decisive action against those responsible for crashing the world economy.”
