Welcome to Capital Account. Wall Street banks, including Morgan Stanley and Goldman Sachs, are looking to help their foreign customers skirt new US regulations for over-the-counter derivatives. The banks found ways to route trades via non-US affiliates, exploiting the lack of a precise definition for what constitutes a “US person.” Wall Street’s attempts to circumvent regulations may not come as a surprise, but what is the antidote? We talk to Former FDIC chairwoman Sheila Bair about her experience as a regulator during the financial crisis.
Plus, both the US and the EU have pushed back deadlines to implement the Basel III capital requirements; the Basel III framework more than triples core capital requirements for lenders. Our guest, Sheila Bair, spent much of her career at the FDIC fighting to increase capital requirements, and was critical of the Basel II framework, which let big banks evaluate their assets with their own internal risk models.