Garth Pendleton's  Instablog

As a banker, though our industry has often benefitted from it, I have held the view for the past at least two decades that banking, as a business, is running on excessive leverage and has been poorly capitalized. It was thought banks could handle leverage prudently. Sadly, they cannot.

In any other business, a bank’s balance sheet would not merit even half the debt it is allowed to carry---and I am talking about US’s best and biggest banks. Long before the current financial crisis, the government should have done one of two things---mandated that banks should not be leveraged this irresponsibly, or forced them to have stronger capital base.