But it would not suit the economy, which would be pushed further into recession by sudden cuts in leverage.By lending money to more banks for longer against worse collateral, the Fed hopes to stem panic and buy time.
"The question is, when you wake up the second day, after gambling for the evening, what do you do?" Still, Mr. DeSanctis believes that the days of multibillion-dollar casino developments fueled by high-leverage lending may be over.
"I KEEP thinking how nice it would be to turn off my computer and not come back until September," says the head of leveraged-lending at a large bank.
In the run-up to the financial crisis, mortgage-backed securities and Greek government bonds were thought safe.Some banks claim the leverage ratio inhibits lending.
Diplomatic leverage, international lending decisions and well-enforced sanctions on illicit weapons and diamond smuggling can all be used to pressure the belligerents to live up to their peace commitments.
"This acquisition will allow us to leverage our lending expertise and financial strength to expand our presence in a large North American market with tremendous potential upside".
"They have less leverage with lending institutions and creditors of all types," says Davidowitz. "They're the first ones to go, so to speak, because they can't compete with the big guys".
Having apologized for our necessary behavior in securing global peace the last 60 years, Washington continues to shift private-sector resources to the federal ledger without acknowledging accountability for the undue capital markets leverage, imprudent lending practices and misbegotten financial products that fostered the recent mess.
Even more problematic is that raising capital and leverage requirements may reduce lending more than the current regulatory provisions do because banks would be forced to keep more money on their books rather than lend it.
Instead, apart from increasing bank leverage ratios, which makes lending even harder, and separating commercial and investment banks, which makes the latter more focused on large firms, we have today the same incentives and tax structures that favour speculative over productive finance (eg low capital gains tax, high tax on work).
