Monday, November 28, 2016
We all know that Trump is going to be subject to so much scrutiny that his “conflicts of interest” might even suffer.
But on the large banks’ outrageous conflicts of interest, namely being able to use their own models to partially determine the capital they need to hold, on that everyone keeps mum. Why?
The lower the risk is calculated, the lower is the capital requirements, the higher is the allowed leverage, and so the better are the banks perspectives on obtaining high risk adjusted returns on equity. If that’s not a mother of a conflict of interest what is?