Jul 23, 2010

Larry Summers on calculating future capital requirements for financial institutions

Look, Maria, what am I going to do, give you a number [for what bank capital ratios should be in the future]? It's a very complex subject.

I will say this: it's clear that there wasn't enough capital in the system and there was too much leverage before. And it's clear that whatever we do we're going to need to do in a way that recognizes that we've got a recession from which we have to recover and that's going to depend on a strong flow of credit. And so, assuring a strong flow of credit, but getting to healthier, better capitalized institutions, that's the tradeoff we're going to make on Basel.

~ Larry Summers, director, National Economic Council, CNBC's Closing Bell, July 21st, 2010

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