Sorting out the banks

In particular, Mr Brown wants regulators to insist that banks take a more "prudent" approach to capital reserves, setting aside more money during years of growth to protect them against possible slumps in the future.

Well, yes, but there\’s still some small voice at the back of my head telling me that it was Brown, as Chancellor, who changed the tax laws thus discouraging the banks from "over provisioning".

3 comments on “Sorting out the banks

  1. Brown should have a word with the FSA. During the good times it required the banks to hold low tier 1 capital and then increased it when the banks hit the slump. Exactly the opposite of what he is now proposing.

    And as he has started QE strategy which needs the banks to lend like there is no tomorrow when the prudent thing for the banks to do is hold on to the money.

  2. …….setting aside more money during years of growth to protect them against possible slumps in the future…….

    You know, that might not be a bad idea for governments.

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