Increased Bank Capital Requirements Won't Make Banks Safer

There’s an old adage about banking that’s seemingly as old as banking, and it goes like this: for a well-run bank any capital requirement (no matter how small) is way too high, and for a poorly run bank, no capital requirement is high enough. It’s something for regulators to think about now.  

In the aftermath of troubles at Silicon Valley Bank (SVB), regulators have predictably happened upon increased capital requirements as the alleged banking fix. At best these more stringent rules will weaken banks, and at worst they’ll imperil banking stability.