Stephen Moore Quotes

One of the most important causes of economic crises is “running liabilities”, or short term debt that the government does not insure. The U. S. financial sector holds trillions of dollars of such debt, including uninsured bank deposits and the short-term liabilities of other financial institutions, such as overnight loans…. Amongst the potential causes of the next crisis, the massive amount of short-term debt ranks as the most probable.

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.

So you know, everyone points out Greece's default record, but the history of a lot of sovereign nations is not a good one when it comes to lending them money.

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.

The real danger with debt is what happens if lots of people decide, or are forced, to pay it off at the same time.

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 is very difficult to predict when a bond crisis could happen.

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.

If a lending institution is faced with bids for a package of toxic assets that are less than the carrying value of those assets, the sale of those assets would trigger a further loss and reduce the underlying capital of the institution.

A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.

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.

Under Bill Clinton's HUD Secretary Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in 'credit-deprived' areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting.

Subprime mortgages, typically defined as those issued to borrowers with low credit scores, make up roughly the riskiest one-third of all mortgages.

I think that it would be a mistake for any institution to think that their stake in a default or in a voluntary accord is determined by the amount of their exposure, hedged or unhedged.

When you're levered 9 to 1, it'd be unreal for a bank to go down.

I'm especially baffled by the idea of taking insurance against a U.S. default. If America defaults, we're talking about a chaotic world - Mad Max, more or less - in which case, who imagines that insurance claims will be honored?

When you default on a secured debt, the creditor takes the asset that backs up that debt. When you convert credit card debt to mortgage debt, you are securing that credit card debt with your home. That's a risky proposition.

Congressman Frank and Senator Dodd wanted the government to push financial institutions to lend to people they would not lend to otherwise, because of the risk of default. ... The idea that politicians can assess risks better than people who have spent their whole careers assessing risks should have been so obviously absurd that no one would take it seriously.

If some institution wants to sell you a billion dollars worth of mortgages, they might have to sell 100 million in the market, and then you'll buy the other 900 million on the same terms. Now, the very fact that this has been authorized or will be authorized, I hope, will firm up the market to some degree. And that's fine. But you don't want to have artificial prices being paid.

The longer I operated on Wall Street the more distrustful I became of tips and inside information of every kind. Given time, I believe that inside information can break the Bank of England

I don't trust a bank that would lend money to such a poor risk.

The four most dangerous words in finance are 'this time is different.' Thanks to this masterpiece by Carmen Reinhart at the University of Maryland and Kenneth Rogoff of Harvard, no one can doubt this again. . . . The authors have put an immense amount of work into collecting the data financial institutions needed if they were to have any chance of making quantitative risk management work.