Paragraphs to ponder

The pursuit of “risk
sensitivity” led to a re-organisation of bank assets away from lending on the
basis of the banker’s private views about the borrower – regulators considered
this hard to quantify and a little suspect – towards lending on the basis of an
external credit rating. The higher the rating, the lower the capital banks had
to set aside against the loan. Regulators saw this as not only risk-sensitive
but transparent and quantifiable. Banking by numbers was oh so modern.

Here is much more, interesting throughout.


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