Hey! Megan McArdle! Maybe the OECD governments that negotiated the Basel accords assigned a zero risk-weight for OECD sovereign debt because they wanted to incentive banks to buy their debt at low interest rates. And maybe banks complied because they assumed that they'd get bailed out by somebody if those bets ever went bad.
It wasn't about mistakes made while "risk engineering". It was simple political economy.
IPE @ UNC
IPE@UNC is a group blog maintained by faculty and graduate students in the Department of Political Science at the University of North Carolina at Chapel Hill. The opinions expressed on these pages are our own, and have nothing to do with UNC.
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Friday, November 11, 2011
Keep It Simple
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