, Columnists
The Case Against Banking’s Case for Less Capital
This article is for subscribers only.
Wouldn’t it be nice if there was a way to make banks safer, healthier and able to lend more? There is a way, and it’s called equity.
If banks were less heavily indebted and relied more on unborrowed money, also called equity or capital, to fund their loans and other assets, they could avoid getting into financial trouble if they incurred losses. They would be better able to continue lending. And the financial system would be less fragile.