Gerry Sullivan

Investment Bank Regulation: Beware the Dawn of This New Era

Very good analysis. Leverage in financial institutions caused the problem and will not be allowed at these levels again in our lifetimes.

Very high margin (money borrowed from brokers as a % of account equity in the 1920s) led to the 1929 stock market crash. 75 years later, we still have regulation of margin accounts by the Federal Reserve and a 50% margin requirement.

The Fed did get $30 billion of BSC assets (quality unknown) and JPM is paying the Fed 2.5% on the entire $30 billion. Time will tell how that works out.