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September 13, 2010

What a bunch of baloney

Given what's happened, it's amazing that the Wall Street lobby is still spouting the sophistry that led to the financial crisis. This is from a Wall Street Journal story on the Basel III accords.

Many bankers were less enthusiastic. "Every dollar of capital is one less dollar working in the economy," the Financial Services Roundtable, a lobbying group of large U.S. financial firms, said in a statement.

No, every dollar of capital is a dollar spent on an insurance policy against another disaster. Excessive leverage is poison. Wall Street is well able to finance a thriving economy while maintaining common equity of 7 percent.

Posted by Jay Hancock at 7:15 PM | | Comments (0)
        

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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