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That's actually a good insight.

Of course, as soon as you make it the basis for regulatory action, the thus regulated entities will try to figure out ways to game it. So we'd need to figure out whether it's robust against accounting gimmicks.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Mar 18th, 2010 at 09:24:53 PM EST
[ Parent ]
The profit motive will ensure that, through "innovation", banks operate on the edge of regulatory compliance.

The brainless should not be in banking -- Willem Buiter
by Carrie (migeru at eurotrib dot com) on Fri Mar 19th, 2010 at 12:36:35 AM EST
[ Parent ]
Which is why it is so crucial to have simple and very clear rules without any complexity.

This is the opposite of the US financial regulation system, and in a large part depends on the political system, where banks can fund individual congressmen and senators to add complexity and exemptions.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Mar 19th, 2010 at 07:25:02 AM EST
[ Parent ]
Yes, but that just means that they will try to avoid reporting the parameter you're using to regulate them.

Which is why that parameter needs to be reasonably robust against accounting gimmicks.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Mar 19th, 2010 at 09:42:51 AM EST
[ Parent ]

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