Li Keqiang Quotes

Fannie Mae may have conformed to the rules but the rules didn’t conform to reality. A major bank or financial institution could meet every single regulatory requirement yet still be at the risk of collapse.

Large credit guarantees also impede optimal allocation of financial resources and increase moral hazard.

The overwhelming majority of new mortgages are issued with government backing in a highly concentrated securitization market. That leaves us with both potential taxpayer liability and systemic risk.

A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to know what the risk taken by other banks in the system happens to be at any particular moment.

Regulation is necessary, particularly in a sector, like the banking sector, which exposes countries and people to a risk.

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.

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.

Leverage is great when it works, and when it doesn't work, it creates a lot of issues. So I think if you limit the amount of leverage that people can borrow, or that banks can borrow, I think you'll find that you'll have a lot less issues going forward.

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.

As we try to make the financial system safer, we must inevitably confront the problem of moral hazard.

We should ban banks from risk-taking because society is going to pay the price.

Bailing out every bank that fails makes the system riskier, not safer.

What I think about derivatives is if every institution that owns or trades them is properly margined and marked to market, including end-users, including every institution, including sovereigns and multilateral institutions, then the system would be safe - if people were margined the way customers of investment banks are margined.

It is impossible to understand the financial health of big financial institutions and their potential impact on the market. They don't even understand it themselves.

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

No country can be complacent in making sure that excessive debt of the household doesn't create excesses and weaknesses in the financial system. Everything is interconnected.

We need to increase the transparency of shadow banking markets so that authorities can monitor for signs of excessive leverage and unstable maturity transformation outside regulated banks.

In the financial system we have today, with less risk concentrated in banks, the probability of systemic financial crises may be lower than in traditional bank-centered financial systems.

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.

If nobody can sell mortgage-backed securities based on trillions of dollars of unpayable instruments, there's a lot less risk in the overall system.

Raising minimum capital requirements [for banks] is expensive. But it is safe.

Global banking’s current structure generates an unjust distribution of risks, where losses are socialized.

I think people have to be very careful with new ideas [in fiancé and economics]. What you need to worry about is when you have something that’s a really good idea, but you get too much of it too fast, like over-the-counter derivatives.

Compelling large banks to hold more capital reduces their risk of failure, but as the last financial crisis [the Meltdown of 2008] demonstrated, during a wide-spread panic, investors and lenders lose all faith in the values banks have assigned to their assets, and many mistrust the banks that claim to have enough capital.

You want banks to take some risk, but intelligent risk.