Sunday, March 1, 2009

62.5 times leverage?

I wonder what many of those out there discussing so pompously the financial crisis would be saying if they only knew such basic facts that the Basel Committee in their minimum capital requirements for the banks have actually authorized a bank to leverage its equity 62.5 times if it lends to clients perceived by the human and fallible credit rating agencies as AAA to AA-.

These so knowledgeable discussants would do well picking up some basic knowledge here: