William Dudley wasn’t the first regulator to endorse the idea of allowing banks to convert debt into equity if they need capital in a pinch, but the president of the Federal Reserve Bank of New York has gone further than any other policymaker in making the case that “contingent capital” is key to averting another banking crisis. While there are less-complex proposals out there, like simply requiring large banks to hold more capital, Dudley worries that when bad loans begin piling up, even well-capitalized banks can find themselves with thin buffers and few options for raising capital. They wouldn’t have such worries if debt could be automatically converted into equity in the event of a capital crisis.
The Most Powerful Regulator You Don’t Know
Most Popular Articles
Latest Articles
Labor market report is good news for mortgage rates
Friday’s jobs report came in as a miss of estimates and wage growth came in lower than expected, which is good news for mortgage rates.
-
Virginia Realtors: Zillow’s touring agreement may not be legal
-
Low inventory creates challenging conditions in North Carolina’s housing market
-
Tri-state area housing shortage could cost the region economically
-
Remote reverse mortgage counseling now permanently permitted in Massachusetts
-
NAR settlement terms slated to go into effect in mid-August