Banking regulation: Letting taxpayers off the hook

Posted: November 10, 2014 in economy
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Banking regulation


New rules on bank capital aim to put an end to state-backed bailouts



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WHEN big banks fail, taxpayers usually foot the bill. For instance, since the most recent financial crisis, British taxpayers alone have provided around £1.2 trillion ($1.9 trillion) worth of support to banks. Governments and their citizens around the world are understandably keen that this does not happen again. In response to this pressure, on November 10th the Financial Stability Board (FSB), an international group of regulators, announced proposals that Mark Carney, the governor of the Bank of England, says will end the risk to the public purse from bank failures.
Under the proposals­—named “Total Loss-Absorbing Capacity” (TLAC)—big banks will have to fund themselves with loss-absorbing capital equal to 16-20% of their risk-weighted assets. This capital includes both shareholders’ equity and some …

via Economic Crisis


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