According to the new regulation, all company/signature that is considered, has insufficient capital, can be reconstructed or even closed by the regulators. The subject happens here through the suitable measurement that can realise the regulators, that must neither underestimate nor to overestimate the level of sufficiency of capital of the companies. That can be assured through some type of regulation? The subjective component in these evaluations can be a determining factor at the time of considering if an organization has capitalization problems. One is due at least to recognize that it is a good initiative. The challenge for the new regulation happens to have balance and capacity of immediate action. The regulation must be effective to control that the financial system and its component institutions, do not exceed in the taking of risks, but the regulating action does not have either to drown the development and growth of the financial system.
An important element that it adds the regulation proposal is that the bad administration of the financial organizations can put in risk the stability of the high positions. In fact, to those organizations in which the capitalization level is insufficient, putting in risk their solution, their executives could be dismissed (with possible loss of prestige). Among others measured to avoid the excessive taking of risk regulation will look for to limit so much the risky positions as the incentives to take these positions: it is so the regulation will limit the exhibitions of credit, as well as the wages and bonds (limiting in this way the incentives the cortoplacistas decisions of the banking executives). For the new regulation, the size yes matters. Read more from Daniel Lubetzky to gain a more clear picture of the situation. From the government of the USA it is preferred that too great financial organizations do not exist to fall. The sad experience of Lehman Brothers, has demonstrated that it is not possible to drop to a financial institution of great size without waiting for deep and lasting consequences on the financial system.