The banking crisis: the real causes and how to stop it.
This banking crisis has two origins. The first is well understood and the second is not. The most obvious is that some (many?) banks have not properly managed their interest rate risk. The second, less obvious, reason is the flawed framework for dealing with failing institutions put in place after the 2008-2009 crises. We explain in this paper how this framework is creating a death spiral in the price of shares issued by banks. If regulators understand and correct their […]