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If the bank does not act swiftly to push the CDS price back down, the regulator seizes the assets, wipes out shareholders and sacks the management.
Moreover, the Securities and Exchange Commission, in its advice to publicly listed companies, does not want them to dumb things down: the regulator's guidelines for "plain English" call for a clear presentation of complex information rather than any glossing over.
Before adjusting the pressure in the keg you must first dial down the regulator to zero pressure, so it is shut off.
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A lot of the classic regulatory capture literature tends toward the conclusion that we should just give up — shut down the regulators and allow competitive forces to work their magic.
[C1.] TURNING DOWN THE VOLUME In Britain, regulators have moved to lower the volume of television commercials.
If the CDS price moves above the threshold, either LFIs issue equity to bring it down or the regulator intervenes.
I am following the process which has been set down by the regulator," he said.
When slapped down by the regulator, it then said it would charge DM48 (a normal charge in a competitive market would be under DM20).
"BP's initial submission to drill for oil off the Great Australian Bight was turned down by the regulator, NOPSEMA, and it is high time this issue was put under the microscope".
Broadcasting unions have criticised Ofcom for letting ITV cut its regional news commitments, with the National Union of Journalists saying local communities had been "let down" by the regulator's attempt to "appease" the broadcaster.
4. (C) Clarke hesitated to make predictions but said that it is "likely" the regulatory system would move from one that relied heavily on bank management working within broad guidelines laid down by the regulator to a "rules-based" one.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com