From the Wall Street Journal:

“Global financial reforms that have drawn howls from bankers aren’t nearly enough to avert another disaster, said academic economists gathered here for the annual meeting of the American Economic Association.

“In recent months, regulators around the world have taken steps toward ensuring banks are able to weather tough times. New international rules will require big global banks to hold more equity to protect their depositors and other creditors. In the U.S., lawmakers have adopted measures intended to rein in risk at big banks and keep closer tabs on potential threats throughout the financial system.

“Over the past few days, though, economists here offered a litany of reasons why the reforms fall short. Among their concerns: The new capital requirements aren’t tough or simple enough, there is too much uncertainty about how governments will deal with distress at the biggest lenders, and little has been done to prevent the kind of crisis that could occur if trouble broke out at many smaller institutions, such as hedge funds.

“I just don’t think we’re doing what we need to do,” said Anat Admati, a finance professor at Stanford University. “We’ve allowed bankers to confuse us into keeping things pretty much the same.”

WSJ

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