In a statement, Lincoln’s spokeswoman said she wanted to make sure “no Arkansas bank—no matter its owner—is punished”. Why does raising capital requirements constitute punishment? Aren’t Arkansas families punished when leverage goes up and risk enters the system and banks fail, rippling through the economy and causing the kind of deep recession we saw in the 2008 period? Lincoln’s claim that she just wants to protect local banks that didn’t destroy the economy – ridiculous on its face, because the market for riskier securities could easily flow down to banks with looser regulatory requirements – doesn’t match her actions.
|By: David Dayen Wednesday June 23, 2010 2:45 pm|