She pointed to a simple measure of banks’ capital levels — one that considers how much debt they’re taking on without factoring in what kind of risks they’re taking — that suggests megabanks’ capital buffers are now roughly where they were in 2009. It’s unclear where the next threats to the financial system might come from. Bair is less worried about crypto, for instance, than she is about turmoil in private credit markets, where lenders that aren’t banks make riskier loans to businesses. But the whole point of capital is that it’s intended to guard against the unexpected.
And right now, she’s worried that regulators are letting their guard down...
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