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FT.com / Lex / Macroeconomics & markets - "Smart" securitisation
On one level, such initiatives might be welcomed as industry practitioners try to find a market solution to their own problems, reducing the need for taxpayer-funded bail-outs. But there are dangers here. As studies of the origins of the financial crisis such as the UK's Turner Review have concluded, one of the keys to creating a sounder banking system is increasing the quantity and quality of bank capital - which also, of course, means lower returns. Since the new schemes being developed are designed to cut the capital cost of risky assets, they potentially go against the spirit of such proposals. (bold mine)

How surprising!

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Mon Jul 6th, 2009 at 07:27:40 AM EST

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