Abhijit Banerjee Quotes

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

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.

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.

The chances of a bank going out of business are extremely slim, but it's always a good idea to spread around major sums so every penny is backed by insurance.

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.

For years, critics of Fannie Mae have warned that it does not give them enough information to judge its risks.

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

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.

I'm afraid sometimes certain individual cases of defaults are unavoidable. What we should do is to step up monitoring, properly handle relevant matters, and ensure there is no regional and systemic financial risk.

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

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.

Credit ratings and risk weightings must undergo a thorough process of review and revision. No security or instrument on the planet should have a zero risk weighting.

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.

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

Many of the basic lessons of business, such as the critical value of customer service or measuring risk against reward when investing capital, have essential application in government, but not in a vacuum.

A financial institution has the task of taking risks, and if it's a well run institution - say, Goldman Sachs - it tries to cover the potential losses to itself, but only to itself.

We have to make sure that the banks pay every nickel of loan losses that they create, but we don't want to hold them responsible for withdrawals if we want the economy to recover.

The biggest difference between the private sector and public sector is in the private sector, there's a sense of urgency because you have customers and you have competitors. Whereas in government, one of your major objectives is to not make any really big mistakes.

What you want to watch are the lenders, not the borrowers. The borrowers will always be willing to take a great deal for themselves. It's up to the lenders to show restraint, and when they lose it, watch out.

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

I spent my whole career thinking about risk, markets, infrastructure, and regulation. I had seen the financial crisis unfold, and I had seen the credit derivatives market get operationally ahead of itself, which resulted in systemic risk counterparty exposures. I began to believe that distributed ledgers had the capability to tackle that problem.

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.

The more men have to lose, the less willing are they to venture.

If you want the most reward you have to take the most risk.

I won’t bet $100 against house odds between now and the grave.