Higher capital requirements bind nothing when capital quality is unregulated

Evidence

Of course, greater capital requirements for banks amount to no binding constraint if there is continued enhanced freedom to identify as “capital” almost anything you want (debasing its “quality”), if there is no serious confrontation with the shadow banking sector and especially the plague of repo financing, and nothing whatsoever addresses the virtues of the possibility of separation of banking functions into different insulated institutions, such as the so-called Volcker Rule. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 539

Categorization

• XREF: Connects to the theme of regulatory capture via semantic flexibility — the ability to define ‘capital’ loosely — echoing how ‘information’ and ‘risk’ get debased in other post-crisis frameworks. — connects to: Banks resisted capital requirements that would restore consequential responsibility for losses; Capital requirements shift loss burden from taxpayers back to banks. — Albert Bandura, Moral Disengagement: How People Do Harm…, 1563; Regulatory capital rules redefine banks as investor vehicles rather than funding distributors — Ève Chiapello, Financialisation of Valuation, 64

Broader Connections

• Capital requirements shift loss burden from taxpayers back to banks. #qualifies (0.85) — Albert Bandura, Moral Disengagement, 1563
• Banks resisted capital requirements that would restore consequential responsibility for losses #corroborates (0.80)
• Regulatory capital rules redefine banks as investor vehicles rather than funding distributors #complicates (0.72) — Ève Chiapello, Financialisation of Valuation, 64