Capital requirements shift loss burden from taxpayers back to banks.

Evidence

Another part of Dodd-Frank requires large investment banks to hold sufficient capital to cover their losses. This forces banks rather than taxpayers to pay for their mistakes. Having the wrongdoer pay restores consequential responsibility for fraudulent financial practices. Investment bankers oppose higher capital requirements on the grounds that it will diminish their competitiveness. This justification received a sympathetic hearing from congressional supporters of the financiers. — Albert Bandura, Moral Disengagement, 1563

Categorization

• XREF: connects to: Bank debt transformed into state debt through lost revenue, not profligate spending — Mark Blyth, Austerity: The History of a Dangerous…, 139; Higher capital requirements bind nothing when capital quality is unregulated — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 539; A banker’s power now grows proportionally with his bank’s losses — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 929