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In a report in April that was criticised for not being radical enough, Vickers recommended that banks be forced to ring-fence their high street banking businesses and also hold more capital – "at least" 10% compared with the 7% currently required.
One reason is that Goldman had far more capital at its disposal than any other firm.
Institutional voids can persist for decades, and cannot be resolved by throwing more capital at the problem.
Returns will drop if banks have to set aside more capital at the national level, or fund themselves from domestic deposits.
But scaling up production will require more capital at a time when the financing environment for clean-tech companies is far from auspicious.
Throwing yet more capital at them risks perpetuating what Paul Krugman, a Nobel prize-winning economist, calls "lemon socialism", in which banks reap the gains but taxpayers eat the losses.
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First, there is less capital required than ever before, while at the same time there is more capital available (at least for seed stage companies).
[C3.] Freddie Mac Reserves to Increase Freddie Mac, which last year restated earnings by $5 billion because of accounting errors, must keep 30percentt more capital, or at least $32.6 billion, on reserve than previously required at least until it releases financial statements for 2003, the Office of Federal Housing Enterprise Oversight said.
Sweden's banks have raised billions of dollars in more capital, albeit at a high price.
Q.How do you square the circle of asking banks to hold more capital, and at the same time ensure that they lend into a recession?
Germany and France have yet to resolve their differences about how best to recapitalize the banks, and the banks have yet to agree to the idea of raising more capital — while at the same time contributing more toward the Greek bailout.
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