Eurodollar University BREAKING: Bank Rules JUST Changed, Here's What You MUST Know
Jul 13, 2025
Recent regulatory changes in banking are stirring debate—some call it a stealth QE, while others remain perplexed. The discussion dives into the historical failures of banking regulations from the 1970s and their role in past crises. It critically assesses the new proposals aimed at bolstering U.S. Treasury markets and questions if the reduced capital requirements can truly prevent dysfunction. Insights from a crisis in 1974 highlight the fragility of the global banking system, revealing ongoing vulnerabilities in financial oversight.
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Misleading Purpose of Bank Rules
- Capital and leverage ratio changes aim to free bank balance sheets but mainly serve as theater to appear in control.
- Quantitative bank measures exist because authorities don't truly understand bank functions or influence them effectively.
Complexity Confounds Bank Regulation
- Banks are complex institutions beyond simple cash vaults and loans, confusing regulators.
- The Eurodollar system exposed regulatory complexity challenges 50 years ago with a German bank's near failure.
SLR's Equal Treatment of Assets
- The Supplementary Leverage Ratio (SLR) counts all bank assets equally, removing asset quality distinctions.
- This approach aims to prevent banks from hiding leverage through capital relief or regulatory arbitrage.