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Even with the stricter guidelines proposed Wednesday, economists expressed concern that banks were continuing to operate with thin capital cushions.
"Most immigrants come with relatively thin capital, so you reduce risk by doing what is already done," Dr. Ray said.
Deutsche itself still labours to plump up its own thin capital cushion.Commerzbank can point to several forces beyond its control.
To protect their thin capital, Fannie Mae and Freddie Mac, the big mortgage agencies, said they would limit the volume of new mortgages that they buy.
More importantly, we would not have had the unpleasant inflation and credit explosion that ensued.Bad loans and thin capital cushions are indeed a worry.
The combination of potential losses on the European debt and the MF Global's thin capital cushion is what spooked investors, setting off the crisis.
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The deal left it with wafer-thin capital cushions.
The report also cited a string of other reasons, including "underlying deficiencies in RBS management, governance and culture," as well as its wafer-thin capital ratios.
This acquisition left the bank with a wafer-thin capital cushion and ultimately led to the £45bn taxpayer bailout of the bank in October 2008.
Hampton notes that shareholders voted for the ABN Amro takeover, which left the bank with a wafer-thin capital cushion, and that the FSA had permitted RBS to run on a very low capital base.
The FSA is braced for criticism it should have done more to stop the ABN Amro takeover which left RBS with wafer-thin capital ratios as the banking crisis began.
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