US

Larry McDonald Explains Why Everyone On Wall Street Is Freaking Out Over Capital Requirements

Everyone on Wall Street wishes regulators weren’t pushing for such high capital requirements. 

The proposed regulation in the U.S. means that banks have to post more collateral against trades, for example, or loans to small business owners. Banks think the proposed ratio is too high and they’re fighting HARD to get it lower.

Basel III rules will set a capital surcharge that banks must post at 7%. In addition to that, U.S. regulators propose tacking on an extra 3% capital to debt margin requirement (possibly just 2% to 2.5%, if a rumour on CNBC is correct). 

Here’s what a former Lehman Brothers trader, Larry McDonald, has to say about capital requirements.

And click here for more info on the capital requirements debate.

Produced By: Kamelia Angelova and Simone Foxman

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