Anat Admati on banks’ need for more capital, better regulation
In 2010, Jon Corzine, CEO of MF Global, revamped the company into a riskier full-service brokerage firm. But his vision came unstuck in October 2011, when Moody’s downgraded it to junk status because of large bets MF Global had taken on the bonds of some of Europe’s most indebted nations, causing the firm to fail. This week, a federal judge said he will allow a lawsuit seeking to hold Corzine and other MF Global executives responsible for the brokerage's collapse. Erin Ade reports. Then, it’s seven years this week since the financial crisis started with British bank HSBC’s shock announcement of large bad debt on subprime US mortgages. Erin elicits pointed commentary from Stanford Finance and Economics Professor Anat Admati on bank capital, bank regulation and shadow banking. In Big Deal, Erin and Edward Harrison discuss the questionable $13 billion Justice Department deal with JPMorgan Chase over bad mortgage loans.
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