About 18 months ago, when we first told our bank CEO’s, with whom we have regular meetings at the level of the Banking Committee, which I chair, and which brings together senior Bank staff and all the members of the MBA, that we intended to publish the CAMEL ratings, they almost fell off their seats!
We can consider issues of intergenerational distribution: whether outcomes for people in one generation depend on the experiences of their parents. It turns out that these sorts of distributional issues matter for policy. Certainly they matter for financial stability policy. It is rarely the median borrower who defaults. Risk comes from the tails of the distribution.