Bank Leverage Is the Defining Debate of Our Time
This article is for subscribers only.
Sept. 3 (Bloomberg) -- Every age has great debates on itsdefining questions. Sometimes these disputes are on a grandscale: capitalism versus communism. Sometimes they concerndetails that puzzle later generations: Summarize the main pointsof contention in the Thirty Years’ War, without consultingGoogle.
The defining conflict of our time is over what might seemto be a relatively arcane and technical detail: leverage,meaning the extent to which financial institutions should beallowed to borrow relative to their total balance sheets. Thequestion won’t be decided on the battlefield, in the courts orby the public. The Board of Governors of the Federal ReserveSystem will make the call.