Tyler Cowen Quotes

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.

Banks lend by creating credit. They create the means of payment out of nothing

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.

When you collect bad loans... you sure learn a lot about making good ones. You also learn a lot about the power of persuasion, persistence and desperation.

The business of a bank is to lend money; which amounts, nowadays, to lending credit.

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.

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.

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.

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.

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

Rather than going through a commercial banking training program, at the first bank I ever worked in, I was the chairman. And it was my own money, so we loaned it out like it was my own money.

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.

Fannie Mae has never publicly disclosed how much money it could lose if interest rates rose 1.5 percentage points in a very short period of time.

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.

At the heart of banking is a suicidal strategy. Banks take money from the public or each other on call, skim it for their own reward and then lock the rest up in volatile, insecure and illiquid loans that at times they cannot redeem without public aid.

The American banking system, which at one time extended productive loans to agriculture and industry, has today become a giant betting machine

Banks always want their capital requirements to be as low as possible, so they can take more risks, which can enable them to make more money – and reap bigger bonuses for executives.

It is wrong when we, in effect, throw safe and sound financial institutions into the same category with banks and lenders that climbed too far out on a limb with no way to return.

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.

The number one priority is going to be make sure that banks lend.

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.

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.

Banks can’t put their money in the bank. They have to lend it out.