Tough Bank Rules Coming : Global Group Prepares to Limit Risk-Taking; Cost of Loans Could Rise

The Wall Street Journal reports:

Regulators from 27 countries are hammering out a deal that would force the world's banks to hold much larger reserves against potential losses, the centerpiece of a sweeping set of new rules that is meant to stave off a repeat of the financial crisis of 2008.

Convening in the Swiss city of Basel, the officials are hoping to cinch a deal this weekend. In one of the most far-reaching steps, the current proposal would require global banks to maintain basic levels of capital equal to at least 7% of their assets—much more than existing standards of roughly 4% for large U.S. banks.

4% is 25 to 1 leverage. As economist Murray Rothbard has stated: banks are essentially bankrupt.