They use too much leverage (in other words, they have risky balance-sheets) and are thus a threat to financial stability.
The Fed now has a very large and very risky balance sheet and it must rely on the Treasury for a potential bailout and recapitalization.
Managing that risk is what banks do: by holding a risky balance-sheet they allow households and firms to have safe ones.Since the maturities of their assets and liabilities do not match up, banks tend to give themselves some margin for error.
The goal is to have a model that can not only capture a crisis when banks are highly vulnerable to risk, but can also account for why banks adopt such a risky balance sheet in the first place.
Companies with riskier balance sheets would pay more.
Erika Safran, principal at the Financial Asset Management Corporation in Manhattan, called some of the riskier balanced funds "ridiculous for investors".
The hometown visit was a risky political balancing act for Mr. Obama.
You could even print out a section to read in the bathtub... which is much easier and less financially risky than balancing a $180 tome on the edge of your bathtub.
Still, long-term understandings, let alone an agreement on core strategic issues in the relations between Israel and the Gaza Strip, will require both adversaries to pursue a risky political balancing act.
It is always risky to balance when the balancer has an unbid short suit.
