, Columnist
Banks Aren’t as Safe as They Think
Measures taken to prevent another financial crisis may just be adding new risks.
Bank stocks are booming.
Photographer: Stephanie Keith/Getty Images
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In the decade since the collapse of Lehman Brothers, regulators around the world have taken steps which, they argue, have greatly strengthened the resilience of the financial system. Buoyant asset prices and rising bank shares suggest that investors largely believe them. Unfortunately, the effectiveness of these measures remains uncertain. That will only become clear in a real downturn, rather than a simulated stress test.
The focus on raising collateral requirements exemplifies the problem.