Sheila Bair is worried that the current economic and health crisis will turn into a financial calamity.
Bair, who was a key player in the government’s response to the financial crisis a decade ago as the head of the Federal Deposit Insurance Corporation, is concerned that regulators are focusing on the wrong things.
Regulators, at the urging of the big banks, are moving to loosen capital requirements for financial institutions at the same time that the banks ought to be shoring up their balance sheets to protect themselves from a potential wave of corporate debt defaults, she said.
Corporate debt is at record levels and huge chunks of it are held by US banks.
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Sheila Bair is intimately familiar with what a financial crisis looks like and how devastating it can be.
So when she says she’s worried that we may be heading toward one, it’s probably a good idea to pay attention.
Bair, who was a key player in the federal government’s response to the financial crisis a decade ago, sees plenty of danger signs of another such calamity, much of it in the form of corporate debt and the collateralized loan obligations that debt gets sliced and …read more
Source:: Businessinsider – Finance