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"But companies have higher leverage and decreasing cash flow.
You've written about how banks should have higher leverage ratios.
"This business has always had higher leverage in its moniker," he said.
Given that higher leverage equals higher risk, where is the benefit?
Mr. Tarullo said the Fed might set a higher leverage ratio.
But you argue both — FDIC is doing well and we really need higher leverage ratios.
I understand why the banks don't want a higher leverage requirement.
Before the bubble burst, much higher leverage ratios became common in those institutions, which were aggressively marketing mortgage-backed securities.
Nationwide also remains in discussion with the PRA about how to reach the higher leverage ratio required by the PRA.
In reality, the higher leverage requirements already in place have had no effect whatsoever on lending growth or borrowing costs.
"Corporate America needs to deflate their compensation packages because with higher leverage comes higher risk," Mr. Reda said.
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