These include creating strong conflict-of-interest policies at the nation's banks and requiring that banks hold higher reserves against risky mortgages.
The Federal Reserve Board and two other Federal agencies today proposed requiring banks to maintain more financial reserves for risky loans than for safer loans.
This would allow the bank to put more capital to work earning profit, rather than sitting idle as reserves against risky securities, he said.
For now, Brussels is expected to pursue safeguards such as larger capital reserves for risky business or rely on new powers to be granted to the European Central Bank to keep banks in check.
Many Chinese have urged Beijing to stop plowing so much of the foreign reserves into risky dollar assets and instead deploy the funds to acquire the technology and natural resources needed to fuel the nation's economy.
Africa provides roughly 15% of America's oil imports—a share that will surely rise as firms seek more reserves outside the risky Middle East.
Their conclusions are not happy reading for European banks, which are trying to pare back lending, increase capital reserves and reduce risky trading activity in investment banking units.
The day before had come the announcement about new international rules on bank capital requirements, which were supposed to make the banks safer by making them keep larger amounts in reserve against their riskier activities.
This implies a symmetry that is simplistic at best, dishonest at worst.Bank presidents have a fiduciary duty to their shareholders to engage in responsible lending practices, maintain adequate capital and loan loss reserves and avoid unduly risky behaviour that could jeopardise the survival of their institutions.
At best, they use Rotating Savings and Credit Associations (ROSCAs), a traditional practice of mobilizing savings, brilliant but sometimes very risky (and reserved for the middle class, the one having the capacity to save) and at worst they are entrenched with the usurious moneylender, with very prohibitive interest rates, for example, 300% in Ethiopia (Belwal et al. 2012).
