Paul H. Kupiec | AEI Economics Working Paper Series In his most recent working paper, Paul Kupiec discusses recent proposals that have recommended important modifications to the supplemental leverage ratio (SLR), the ratio of an institution’s Tier 1 capital to its total leverage exposure. Introduced by the Basel Committee in 2010, SLR seeks to drive banks to examine how they hold their derivatives exposure. Kupiec argues that rather than change the construction of SLR, a much better solution for promoting liquidity is to significantly raise the minimum SLR to minimize the debt-overhang problem. Additionally, Kupiec argues in favor of revising the deposit insurance pricing system so that premiums are much closer to fair market prices for insurance.
Paul H. Kupiec | American Banker Paul Kupiec identifies the major gap in big banks’ argument against the leverage ratio. He argues that excessive leverage was a primary cause of the financial crisis, and yet big banks and even some government officials appear eager to relax rules that limit leverage at the largest US financial institutions. Kupiec believes that banks’ argument for why such reform is necessary doesn’t hold water -- the solution is not to replace the supplemental leverage ratio.
Paul H. Kupiec | American Enterprise Institute Paul Kupiec discusses the drawbacks of Basel III -- a comprehensive set of reform measures aimed at strengthening the regulation, supervision, and risk management of the banking sector. He argues that community banks will face large costs under Basel III and that any possible benefits of the proposal are unproven. He fears that Basel III will impose significant costs on the industry and that its governance lacks transparency.