Tucker As Well As Bagehot At Hoover
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I had the pleasance in conclusion calendar week of assist the conference on Central Bank Governance And Oversight Reform at Hoover, organized past times John Taylor.
Avoiding the usual academic interrogation of what should the Fed do, in addition to the endless media interrogation will-she-or-won't she heighten rates, this conference focused on how central banks should brand decisions. Particularly inward the context of legislation to constrain the Fed coming from Congress, amongst financial dirigisme in addition to "macro-prudential" policy an increasing temptation, I institute these moments of reflection quite useful.
Some of the issues: Should the Fed follow an "instrument rule," similar the Taylor rule? Should it receive got "goal," similar an inflation target, but so broad latitude to practise what it takes to achieve that goal? What structures should implement such a rule? Implicit inward a dominion that the Fed should practise things, similar target inflation in addition to employment, is an implicit dominion that it should ignore others, similar property prices, commutation rates in addition to so on. (I think this is much likewise oftentimes overlooked. As financial reform should start past times delineating what is not systemic, in addition to thus exempt from regulation, monetary policy rules should start past times maxim what the Fed should ignore.) Should that limitation live to a greater extent than explicit? What's the right governance structure? Should nosotros hold the regional Feds? How should Fed meetings live conducted? Is "transparency" the enemy of productive debate? How much discretion tin an agency receive got spell remaining independent? And so on.
I was going to postal service thoughts on he whole conference, but John Taylor merely posted an fantabulous summary, so I'll merely indicate y'all there.
My project was to hash out Paul Tucker's (ex Deputy Governor of the Bank of England) thoughtful paper, "How Can Central Banks Deliver Credible Commitment in addition to live “Emergency Institutions" Paul's newspaper starts to think deeply most independent regulatory agencies inward general, in addition to monetary in addition to financial policy together. My word is narrower. I'll transcend on the word (pdf here) every bit today's weblog post, every bit it powerfulness live interesting to weblog readers.
Let me start past times summarizing, in addition to cheering, Paul’s of import points.
The measure sentiment says that perchance monetary policy should follow a rule, but financial-crisis firefighting needs discretion; a large mop to construct clean upwardly large messes; flexibility to “do what it takes”; “emergency” powers to struggle emergencies.
I think Paul is telling us, politely, that this is rubbish. Crisis-response in addition to lender-of-last-resort actions demand rules, or “regimes,” fifty-fifty to a greater extent than than monetary policy actions demand rules. At a basic degree whatever determination is a mapping from states of the the world to actions. “Discretion” merely way non talking most it.
More deeply, y'all demand rules to constrain this mapping, to pre-commit yourself ex-ante against actions that y'all volition pick out ex-post, in addition to regret. Monetary policy rules guard against “just this once” inflations. Lender of in conclusion resort rules guard against “just this once” bailouts in addition to loans.
But y'all demand rules fifty-fifty more, when the organization responds to its expectations of your actions. And preventing crises is all about controlling this moral hazard.
To halt runs, our governments guarantee deposits in addition to other loans; they bail out institutions in addition to their creditors; they purchase upwardly assets to heighten prices, in addition to they lend similar crazy. But knowing this, financial institutions accept to a greater extent than gamble than they would otherwise take, in addition to investors lend without monitoring, making crises worse. Institutions that tin borrow at in conclusion resort don’t laid upwardly backup lines of credit, don’t scout the character of their collateral, in addition to don’t purchase expensive position options in addition to other insurance, making crises worse. Investors who know that the Fed volition halt “fire sales,” don’t hold some cash around for “buying opportunities,” making burn sales worse. “Big banks are likewise complex to dice through bankruptcy,” the mantra repeats. But why practise people lend to them, without the protections of bankruptcy? Because they know creditors, if non management in addition to equity, volition live protected.
“The the world is ending. Influenza A virus subtype H5N1 crisis is no fourth dimension to worry most moral hazard,” bankers in addition to regime officials told us in conclusion time, in addition to volition enjoin us again. But the the world does non end, in addition to actions taken inward this crisis are precisely the campaign of moral endangerment for the adjacent one.
This isn’t theory. When the Fed in addition to Treasury bailed out Bear Stearns, in addition to particularly its creditors, markets learned “Oh, Fed in addition to Treasury won’t permit an investment banking enterprise broker-dealer dice under.” Lehman turned downwards majuscule offers, in addition to Reserve Fund losses on Lehman newspaper were plenty to campaign it to neglect inward a run. (This is an update: regard below.)
The severe crisis in addition to recession coincident amongst Lehman’s failure, together amongst the massive in addition to improvised reply — many flavors of Tarp, auto companionship bailouts, in addition to so on — receive got arguably created the “rule” inward participants’ minds most what volition move on adjacent time.
Plans, self-imposed rules, promises, guidance, in addition to tradition are non enough. Given the power, every 1 of us volition bail out. We won’t gamble beingness the captain of the Titanic, in addition to we’ll permit the adjacent guy or gal bargain amongst moral hazard. Influenza A virus subtype H5N1 fundamental banker facing a crisis is similar a manly mortal parent belongings an H2O ice cream cone, facing a hungry three-year old. Sure, Mom’s dominion says dinner e'er earlier dessert. We know what’s happening to that H2O ice cream cone.
The fundamental banking enterprise in addition to Treasury must non be able to bail out what they should non bail out, to lend where they should non lend, to protect creditors who should lose money. That’s the only way to halt it. More importantly, it’s the only way to persuade the moral hazarders that all the fine words inward the nail volition non melt apace inward the emergency.
Two fundamental quotes summarize the Tucker view, in addition to I only agree.
Now, permit me offering a gentle critique.
How are nosotros doing towards the Tucker regime? Not well.
The Dodd-Frank in addition to Basel “regime” has no serious limits at all. Ask yourself, what institutions are not “systemic” in addition to cannot dice so designated? What institutions or creditors won’t be bailed out; can’t be bailed out? What are the securities the Fed or Treasury won’t and can’t buy or lend against? What are the property prices prices that they won’t and can’t prop up?
Paul points out the difficulties. Yes, “constraints” are good. But just what constraints? We tin channel Bagehot, “against expert collateral,” to “illiquid but non insolvent” institutions. Except, every bit Paul reminds us, what’s expert collateral, when noone volition accept anything but Treasuries? How practise y'all enjoin illiquid from insolvent when prices receive got tanked in addition to markets are frozen? It’s non so easy.
More deeply, the Bagehot rules are flawed. If it were clear who is illiquid in addition to who is insolvent, in that location wouldn’t live a crisis. Private lenders would happily back upwardly the clearly solvent. And runs move on at institutions that investors fearfulness are insolvent. If y'all desire to halt runs y'all receive got to prop upwardly at to the lowest degree the creditors of potentially insolvent institutions. Bagehot’s rules may constrain the fundamental bank; they may live expert rules for a prudent investor, they may address moral hazard. But they are non apparently optimal rules to halt crisis or to forestall them from occurring inward the start place.
Worse, when nosotros figure all this out, how practise nosotros write binding laws or regulations that volition effectively constrain bailout-hungry officials? For example, Paul Volcker proposed a fine clear rule, “thou shalt non finance proprietary trading amongst deposits.” Which, 600 pages in addition to counting later, is utter mush.
So hither nosotros are, half dozen years after our crisis — or 82 years after 1932, or 113 years after 1907, or, heck, 300 years after 1720— in addition to every bit eminent a thinker in addition to practitioner every bit Paul nevertheless needs to invite hereafter idea on what these rules ought to be, permit solitary merely what legal restrictions volition truly enforce them in addition to communicate that expectation.
I fearfulness that the adjacent crisis volition live upon us long earlier Paul has figured it out, in addition to a century earlier he gets the Basel committee, the Fed, ECB, FSOC, Congress, Parliament, SEC, in addition to so on to dice along.
***
So, I grip amongst pretty much all Paul has to say. but I infer the contrary message. If this is what it takes to rescue the family of cards, so nosotros demand a unlike house, 1 non made of cards. We demand to halt crises from happening inward the start place.
To its credit, that is the other one-half of our contemporary policy response: This time, finally, the regular army of regulators in addition to stress testers volition regard the crisis coming; amongst their Talmudic rules in addition to interpretations, in addition to their slap-up discretion, they volition halt whatever “systemically important” financial establishment from losing money, despite the moral endangerment sirens, in addition to without turning that financial organization into something resembling the Italian dry soil telephone companionship circa 1965. Good luck amongst that.
Consider an alternative: Suppose banks had to fund risky lending past times issuing equity in addition to long-term debt. Suppose mortgage-backed securities were funded past times long-only, floating NAV usual funds, non overnight repo. Suppose all fixed-value demandable assets had to live backed 100% past times our abundant render of short-term Treasuries. Then nosotros truly would non receive got runs inward the start place. And a lot of unemployed regulators.
Why practise nosotros non receive got such a world? Originally, because y'all can’t practise it amongst the financial, computational, in addition to communications applied scientific discipline of the 1930s or 1960s. But similar a shot nosotros can. More recently, I think, because moral endangerment so subsidizes the electrical current frail system. But similar a shot nosotros tin alter that.
Paul mentioned this possibility, but gave upwardly quickly, conditioning his remarks on a sentiment that club has decided it wants fractional reserve banking. Well, maybe club needs to rethink that decision.
Really, merely why is it so vital to salve a financial organization soaked inward run-prone overnight debt? Even if borrowers powerfulness receive got to pay 50 reason points to a greater extent than (which I doubt), is that worth a continual serial of crises, 10% or to a greater extent than downsteps inward GDP, 10 1 K k losing their jobs inward the the U.S.A. alone, a 40% ascension inward debt to GDP, in addition to the strangling cost of our financial regulations?
***
Influenza A virus subtype H5N1 in conclusion point. Paul unites financial amongst monetary in addition to financial policy. That’s crucial. The in conclusion crisis raised the U.S.A. national debt from 60% to over 100% of GDP. The adjacent 1 volition require more. At some indicate nosotros can’t borrow that much.
But accept this idea 1 pace further. The adjacent crisis could good live a sovereign debt crisis, non a repetition of a existent estate-induced run. Crises are past times Definition somewhat unexpected, in addition to come upwardly from unexpected sources.
To live concrete, suppose Chinese financial markets blow up, surprise, surprise discovering a lot of insolvent debt. The stress is likewise much for the International Monetary Fund in addition to Europe, so Hellenic Republic goes, followed past times Italia Kingdom of Spain in addition to Portugal, one-half of Latin America in addition to a few American States. Pair that amongst state of war inward the middle eastward — Isis explodes a dingy bomb, say — requiring several trillion dollars.
Now Governments are the ones inward trouble. They won’t live able to borrow trillions more, bail out banks or lend of in conclusion resort. In a global sovereign debt crisis, fifty-fifty Paul’s regime would plough out to live a superb Maginot line. The electrical current regime wouldn’t live that strong.
Influenza A virus subtype H5N1 financial organization deeply subject on the regime position would live finished. This is the lesson of Europe. Influenza A virus subtype H5N1 southern regime default would receive got petty consequences if its banks were non so embroiled inward regime finances.
But a financial organization uncoupled from regime finances would survive.
***
In sum, I cheer pretty much everything Paul said. But It’s an outline for a computer programme that volition accept decades to create total in. And all inward the service of keeping the family of overnight debt cards going.
So the lesson I accept is that instead, nosotros should finally accept seriously the other centuries - old, uncomplicated alternative: equity-funded banking, government-provided interest-paying money, mirroring that slap-up 19th century innovation, government-provided banknotes, in addition to a purge of run-prone assets.
***
PS:
Avoiding the usual academic interrogation of what should the Fed do, in addition to the endless media interrogation will-she-or-won't she heighten rates, this conference focused on how central banks should brand decisions. Particularly inward the context of legislation to constrain the Fed coming from Congress, amongst financial dirigisme in addition to "macro-prudential" policy an increasing temptation, I institute these moments of reflection quite useful.
Some of the issues: Should the Fed follow an "instrument rule," similar the Taylor rule? Should it receive got "goal," similar an inflation target, but so broad latitude to practise what it takes to achieve that goal? What structures should implement such a rule? Implicit inward a dominion that the Fed should practise things, similar target inflation in addition to employment, is an implicit dominion that it should ignore others, similar property prices, commutation rates in addition to so on. (I think this is much likewise oftentimes overlooked. As financial reform should start past times delineating what is not systemic, in addition to thus exempt from regulation, monetary policy rules should start past times maxim what the Fed should ignore.) Should that limitation live to a greater extent than explicit? What's the right governance structure? Should nosotros hold the regional Feds? How should Fed meetings live conducted? Is "transparency" the enemy of productive debate? How much discretion tin an agency receive got spell remaining independent? And so on.
I was going to postal service thoughts on he whole conference, but John Taylor merely posted an fantabulous summary, so I'll merely indicate y'all there.
My project was to hash out Paul Tucker's (ex Deputy Governor of the Bank of England) thoughtful paper, "How Can Central Banks Deliver Credible Commitment in addition to live “Emergency Institutions" Paul's newspaper starts to think deeply most independent regulatory agencies inward general, in addition to monetary in addition to financial policy together. My word is narrower. I'll transcend on the word (pdf here) every bit today's weblog post, every bit it powerfulness live interesting to weblog readers.
Comments on “How Can Central Banks Deliver Credible Commitment in addition to live “Emergency Institutions” By Paul Tucker
May 21 2015
Let me start past times summarizing, in addition to cheering, Paul’s of import points.
The measure sentiment says that perchance monetary policy should follow a rule, but financial-crisis firefighting needs discretion; a large mop to construct clean upwardly large messes; flexibility to “do what it takes”; “emergency” powers to struggle emergencies.
I think Paul is telling us, politely, that this is rubbish. Crisis-response in addition to lender-of-last-resort actions demand rules, or “regimes,” fifty-fifty to a greater extent than than monetary policy actions demand rules. At a basic degree whatever determination is a mapping from states of the the world to actions. “Discretion” merely way non talking most it.
More deeply, y'all demand rules to constrain this mapping, to pre-commit yourself ex-ante against actions that y'all volition pick out ex-post, in addition to regret. Monetary policy rules guard against “just this once” inflations. Lender of in conclusion resort rules guard against “just this once” bailouts in addition to loans.
But y'all demand rules fifty-fifty more, when the organization responds to its expectations of your actions. And preventing crises is all about controlling this moral hazard.
To halt runs, our governments guarantee deposits in addition to other loans; they bail out institutions in addition to their creditors; they purchase upwardly assets to heighten prices, in addition to they lend similar crazy. But knowing this, financial institutions accept to a greater extent than gamble than they would otherwise take, in addition to investors lend without monitoring, making crises worse. Institutions that tin borrow at in conclusion resort don’t laid upwardly backup lines of credit, don’t scout the character of their collateral, in addition to don’t purchase expensive position options in addition to other insurance, making crises worse. Investors who know that the Fed volition halt “fire sales,” don’t hold some cash around for “buying opportunities,” making burn sales worse. “Big banks are likewise complex to dice through bankruptcy,” the mantra repeats. But why practise people lend to them, without the protections of bankruptcy? Because they know creditors, if non management in addition to equity, volition live protected.
“The the world is ending. Influenza A virus subtype H5N1 crisis is no fourth dimension to worry most moral hazard,” bankers in addition to regime officials told us in conclusion time, in addition to volition enjoin us again. But the the world does non end, in addition to actions taken inward this crisis are precisely the campaign of moral endangerment for the adjacent one.
This isn’t theory. When the Fed in addition to Treasury bailed out Bear Stearns, in addition to particularly its creditors, markets learned “Oh, Fed in addition to Treasury won’t permit an investment banking enterprise broker-dealer dice under.” Lehman turned downwards majuscule offers, in addition to Reserve Fund losses on Lehman newspaper were plenty to campaign it to neglect inward a run. (This is an update: regard below.)
The severe crisis in addition to recession coincident amongst Lehman’s failure, together amongst the massive in addition to improvised reply — many flavors of Tarp, auto companionship bailouts, in addition to so on — receive got arguably created the “rule” inward participants’ minds most what volition move on adjacent time.
Plans, self-imposed rules, promises, guidance, in addition to tradition are non enough. Given the power, every 1 of us volition bail out. We won’t gamble beingness the captain of the Titanic, in addition to we’ll permit the adjacent guy or gal bargain amongst moral hazard. Influenza A virus subtype H5N1 fundamental banker facing a crisis is similar a manly mortal parent belongings an H2O ice cream cone, facing a hungry three-year old. Sure, Mom’s dominion says dinner e'er earlier dessert. We know what’s happening to that H2O ice cream cone.
The fundamental banking enterprise in addition to Treasury must non be able to bail out what they should non bail out, to lend where they should non lend, to protect creditors who should lose money. That’s the only way to halt it. More importantly, it’s the only way to persuade the moral hazarders that all the fine words inward the nail volition non melt apace inward the emergency.
Two fundamental quotes summarize the Tucker view, in addition to I only agree.
Prerequisites for whatever such regime are that its terms should mitigate the inherent problems of adverse alternative in addition to moral hazard; live time-consistent; in addition to provide clarity most the amount in addition to nature of ‘fiscal risk’ that the fundamental banking enterprise is permitted to accept on the state’s behalf.
At a schematic level, a money-credit constitution for today powerfulness receive got 5 components: inflation targeting addition a reserves requirement that increased amongst a bank’s leverage addition a liquidity-reinsurance regime addition a resolution regime for bankrupt banks addition constraints on how the fundamental banking enterprise is complimentary to pursue its mandate.***
Now, permit me offering a gentle critique.
How are nosotros doing towards the Tucker regime? Not well.
The Dodd-Frank in addition to Basel “regime” has no serious limits at all. Ask yourself, what institutions are not “systemic” in addition to cannot dice so designated? What institutions or creditors won’t be bailed out; can’t be bailed out? What are the securities the Fed or Treasury won’t and can’t buy or lend against? What are the property prices prices that they won’t and can’t prop up?
Paul points out the difficulties. Yes, “constraints” are good. But just what constraints? We tin channel Bagehot, “against expert collateral,” to “illiquid but non insolvent” institutions. Except, every bit Paul reminds us, what’s expert collateral, when noone volition accept anything but Treasuries? How practise y'all enjoin illiquid from insolvent when prices receive got tanked in addition to markets are frozen? It’s non so easy.
More deeply, the Bagehot rules are flawed. If it were clear who is illiquid in addition to who is insolvent, in that location wouldn’t live a crisis. Private lenders would happily back upwardly the clearly solvent. And runs move on at institutions that investors fearfulness are insolvent. If y'all desire to halt runs y'all receive got to prop upwardly at to the lowest degree the creditors of potentially insolvent institutions. Bagehot’s rules may constrain the fundamental bank; they may live expert rules for a prudent investor, they may address moral hazard. But they are non apparently optimal rules to halt crisis or to forestall them from occurring inward the start place.
Worse, when nosotros figure all this out, how practise nosotros write binding laws or regulations that volition effectively constrain bailout-hungry officials? For example, Paul Volcker proposed a fine clear rule, “thou shalt non finance proprietary trading amongst deposits.” Which, 600 pages in addition to counting later, is utter mush.
So hither nosotros are, half dozen years after our crisis — or 82 years after 1932, or 113 years after 1907, or, heck, 300 years after 1720— in addition to every bit eminent a thinker in addition to practitioner every bit Paul nevertheless needs to invite hereafter idea on what these rules ought to be, permit solitary merely what legal restrictions volition truly enforce them in addition to communicate that expectation.
I fearfulness that the adjacent crisis volition live upon us long earlier Paul has figured it out, in addition to a century earlier he gets the Basel committee, the Fed, ECB, FSOC, Congress, Parliament, SEC, in addition to so on to dice along.
***
So, I grip amongst pretty much all Paul has to say. but I infer the contrary message. If this is what it takes to rescue the family of cards, so nosotros demand a unlike house, 1 non made of cards. We demand to halt crises from happening inward the start place.
To its credit, that is the other one-half of our contemporary policy response: This time, finally, the regular army of regulators in addition to stress testers volition regard the crisis coming; amongst their Talmudic rules in addition to interpretations, in addition to their slap-up discretion, they volition halt whatever “systemically important” financial establishment from losing money, despite the moral endangerment sirens, in addition to without turning that financial organization into something resembling the Italian dry soil telephone companionship circa 1965. Good luck amongst that.
Consider an alternative: Suppose banks had to fund risky lending past times issuing equity in addition to long-term debt. Suppose mortgage-backed securities were funded past times long-only, floating NAV usual funds, non overnight repo. Suppose all fixed-value demandable assets had to live backed 100% past times our abundant render of short-term Treasuries. Then nosotros truly would non receive got runs inward the start place. And a lot of unemployed regulators.
Why practise nosotros non receive got such a world? Originally, because y'all can’t practise it amongst the financial, computational, in addition to communications applied scientific discipline of the 1930s or 1960s. But similar a shot nosotros can. More recently, I think, because moral endangerment so subsidizes the electrical current frail system. But similar a shot nosotros tin alter that.
Paul mentioned this possibility, but gave upwardly quickly, conditioning his remarks on a sentiment that club has decided it wants fractional reserve banking. Well, maybe club needs to rethink that decision.
Really, merely why is it so vital to salve a financial organization soaked inward run-prone overnight debt? Even if borrowers powerfulness receive got to pay 50 reason points to a greater extent than (which I doubt), is that worth a continual serial of crises, 10% or to a greater extent than downsteps inward GDP, 10 1 K k losing their jobs inward the the U.S.A. alone, a 40% ascension inward debt to GDP, in addition to the strangling cost of our financial regulations?
***
Influenza A virus subtype H5N1 in conclusion point. Paul unites financial amongst monetary in addition to financial policy. That’s crucial. The in conclusion crisis raised the U.S.A. national debt from 60% to over 100% of GDP. The adjacent 1 volition require more. At some indicate nosotros can’t borrow that much.
But accept this idea 1 pace further. The adjacent crisis could good live a sovereign debt crisis, non a repetition of a existent estate-induced run. Crises are past times Definition somewhat unexpected, in addition to come upwardly from unexpected sources.
To live concrete, suppose Chinese financial markets blow up, surprise, surprise discovering a lot of insolvent debt. The stress is likewise much for the International Monetary Fund in addition to Europe, so Hellenic Republic goes, followed past times Italia Kingdom of Spain in addition to Portugal, one-half of Latin America in addition to a few American States. Pair that amongst state of war inward the middle eastward — Isis explodes a dingy bomb, say — requiring several trillion dollars.
Now Governments are the ones inward trouble. They won’t live able to borrow trillions more, bail out banks or lend of in conclusion resort. In a global sovereign debt crisis, fifty-fifty Paul’s regime would plough out to live a superb Maginot line. The electrical current regime wouldn’t live that strong.
Influenza A virus subtype H5N1 financial organization deeply subject on the regime position would live finished. This is the lesson of Europe. Influenza A virus subtype H5N1 southern regime default would receive got petty consequences if its banks were non so embroiled inward regime finances.
But a financial organization uncoupled from regime finances would survive.
***
In sum, I cheer pretty much everything Paul said. But It’s an outline for a computer programme that volition accept decades to create total in. And all inward the service of keeping the family of overnight debt cards going.
So the lesson I accept is that instead, nosotros should finally accept seriously the other centuries - old, uncomplicated alternative: equity-funded banking, government-provided interest-paying money, mirroring that slap-up 19th century innovation, government-provided banknotes, in addition to a purge of run-prone assets.
***
PS:
- Thomas Humphrey writes an interesting history of Bagehot's rules inward the Richmond Fed Review, Averting Financial Crises: Advice from Classical Economists.
- Renee Haltom has an fantabulous curt article inward the same issue, Last-Resort Lending for the 21st Century summarizing electrical current views.
- A spate of tidings articles came out in conclusion summertime suggesting Lehman powerfulness receive got been "solvent" after all, here, here, here. Of course of educational activity "solvent" at ex-post prices selects on 1 dry soil of the world. Same comment for how much money the regime in addition to Fed made on bailout deals.
- One interesting indicate came upwardly at the conference (I forget who said this). If the fundamental banking enterprise lends against "good collateral," that takes away of import assets that rightfully belong to debt-holders, in addition to makes them to a greater extent than probable to run.
** Update: I originally wrote incorrectly that the Reserve Fund had 40% of its assets inward Lehman. A correspondent corrected me in addition to pointed me to McCabe, Holscher, Cipriani, in addition to Martin's BPEA paper whose footnote 27 states
The Primary Fund’s losses were caused largely past times its $785 1 K k inward holdings of Lehman debt obligations (1.3 per centum of the fund’s assets) at the fourth dimension of Lehman’s bankruptcy. RCMI, the adviser to the fund, announced at most four pm on Tuesday, September 16, 2008, that the NAV of the fund’s shares had dropped past times 3 percent, to 97 cents, presumably because large redemptions had farther eroded the NAV.
The correspondent adds that money funds can’t receive got that much exposure to 1 counter-party because of limits inward dominion 2a-7. 1.3 / 3 is most 40%, which must live the number Im remembering -- 40% of the losses, non the assets, came from Lehman. This is fifty-fifty to a greater extent than interesting, because it suggests a run on the fund, rather than large actual losses, was the fundamental problem. Moral, banking enterprise check your numbers, fifty-fifty ones y'all think y'all retrieve truly well.
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