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The Bank is given new tools to prevent bubbles from developing in the financial system, including the right to force banks to hold more capital during boom periods.
But if banks are forced to raise more capital during the booms, their finances should be stronger during the busts.Despite this, countercyclical regulations would not be popular with the bankers.
Banks could be encouraged to build up more capital during booms, which would help to avoid excessive lending, and then be allowed to reduce their capital in bad times to cushion the economy from a credit crunch.
Rather than bailing out Fuld and his myopic colleagues, who had failed to heed Paulson's warnings that they needed to raise more capital during the summer, the Treasury and the Fed decided to let Lehman go under and damn the consequences.
But they said there was a "strong signal" that the Bank may use its powers to require banks to build up more capital, through so-called countercyclical buffers, which require banks to build up more capital during a more benign economic environment.
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Leaders on both sides of the Atlantic agree on requiring banks to hold more capital in reserve during good times so they are more resilient during crises.
There are also plans to pump more capital into the banks during 2015.
JPMorgan Chase argues that the minimum standards will make it hold 45% more capital than it did during the crisis, obviating the need for extra padding.
Getting banks to hold more capital and lend more prudently during booms than during busts is like coaxing a cat to put liver in the fridge.
For Napster, the 14 months of litigation means it missed a golden opportunity to raise more capital or even go public during the now-bust Internet boom.
But to fulfill their dreams for the firm, Sack, 31, and his two partners, ages 29 and 31, needed much more capital than they had accumulated during their brief business careers.
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