The country must again review and define an acceptable leverage profile for our economy and specifically for financial institutions. Defining leverage standards too tightly inhibits growth. Defining them too loosely invites excess risk and crisis. My views on this topic are based on 36 years of broad experience in the Federal Reserve.
As head of bank supervision for the Federal Reserve Bank of Kansas City in the 1980s, I saw the damage caused nationally and locally by excessive leverage and bank failures – both small and large.