Roger Altman Quotes

Equity is the cushion that protects financial institutions from unexpected changes in the value of their assets. The greater the leverage, the smaller the losses required to wipe out a company's equity, leaving it without enough money to repay the people who hold its debt.

It's hard to tell which assets will be toxic. The best way to ensure that only shareholders and banks feel it is have adequate capital.

If you are in banking and lending, surprise outcomes are likely to be negative for you.

Market discipline can only limit moral hazard to the extent that debt and equity holders believe that, in the event of distress, they will bear costs.

If I'm a bank, and I'm making risky loans, I have an incentive, if I can, to make those loans using other people's money: in other words, to make highly leveraged loans.

With weak balance sheets, banks tend to continue lending unprofitable businesses and leave them existing.

I've been telling anyone willing to listen that banks have a tendency to sit on time bombs while convincing themselves that they are conservative and nonvolatile.

What the banking system needs is creditors who monitor risk and cut their exposure when that risk is too high. Unlike regulators, creditors and counterparties know the details of a deal and have their own money on the line.

In my own work, I have written about how our public sector bank officials avoid making any new lending decisions - because lending always exposes them to some (infinitesimal) risk of being blamed for the loan going wrong.

One of the risks for anybody in the lending business is that being conservative can harm your competitiveness.

I have no interest in bailing out anybody, quite frankly, and I think banks have to suffer every dollar of loss if they make a bad loan.

When a bank calls in a loan, it obviously hurts the customer in question. But it also adversely affects other banks that have lent to this borrower. They are now less likely to be repaid and so can't as readily lend to their own customers.

I do believe that banks are special - they are very leveraged institutions by nature; therefore, it's even more critical to ensure that the governance and the process of running a banking company are well-organised, managed and regulated.

I had some airline stock, but the airlines tanked. I didn't have a lot of money in them, though.

Losing your capital is like losing your trousers. It is a real humiliation, and one not to be soon repeated.

We don't want to give a business that is not going to come through the troubled waters a loan that they can't pay back.

The fundamental problem with banks is what it's always been: they're in the business of banking, and banking, whether plain vanilla or incredibly sophisticated, is inherently risky.

Any investment bought via credit always runs the risk of margin calls and, eventually, liquidation.

Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement.

If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.

If I finance a bank and I know if the bank will get in trouble, I will be hit and I will lose money, I will put a price on that.

It is the quality of lending over the quantity of lending.

One thing about the business and investing world that I connect to very intimately is that there is little room to deny the harsh realities of your mistakes. A bad call can lose you many millions.

Investment banks manage to go bankrupt through their investment-banking activities, commercial banks manage to go bankrupt through their commercial-banking activities.

As long as there is cash, and the economy is running, all is well. But as a bank, we'll have to test, experiment, try a hundred different things. A few may work, a few may fail, but we have to experiment and try.