Magazine article American Banker

Why One-Size-Fits-All Rules Could Hurt the Recovery: Weekly Wrap

Magazine article American Banker

Why One-Size-Fits-All Rules Could Hurt the Recovery: Weekly Wrap

Article excerpt

Regulation Redo: Tiered regulation based on banks' complexity rather than their size would free financial institutions to serve the needs of their communities while preserving the safety of the financial system, M&T Bank Chairman and Chief Executive Robert Wilmers writes in a three-part op-ed excerpted and adapted from his annual letter to shareholders. He also said it would strengthen the economic recovery.

Readers responded warmly to Wilmers' rallying cry and had several reform suggestions of their own. "I think your argument supports reinstatement of Glass-Steagall although you don't say so explicitly," writes "TxTim," arguing that this would help simplify and stabilize big banks' business models. "Artofgolf" recommends that banks stay away from derivatives entirely, building off Wilmers' point that the instruments "have long bred complexity and confusion."

Building Better Stress Tests: The Federal Reserve should stop making banks play the stress-test guessing game and inform them in advance about the tests' capital requirements and scenarios, according to Jon Hartley, co-founder of financial technology firm Real Time Macroeconomics. He suggests the change would save banks money and help the Fed more accurately assess banks' preparedness for economic downturns. Reader Per Kurowski has an additional suggestion: "stress tests, in order to be complete, should not only be about what is on banks' balance sheets because what is not there can equally stress the real economy. …

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