On 03/10/2012 15:56:22,
See below a link to an opinion piece on Bloomberg by Simon Johnson, a professor at MIT. In summary, the "risk weighting" of banks' assets is a nonsensical and dangerous policy, as it leaves our banking system with far too little equity capital for the risks involved.
A far better measure of capital, Johnson argues, is the simple tangible equity-to-tangible assets ratio, which he suggests should be moved back towards 20% (from the current low-single digit).
Perhaps there's nothing new in the article, but it's a good reminder of the riskiness of the banking sector.
Note the first comment by "Allezy", who presents the flip side of Professor Johnson's proposal -- what a colleague of mine calls "going back to the dark ages"! He might be right.....but it's not that the current situation is without its risks, right?