Chapter
The Debate on Stress Testing in Banking
27:42 - 32:42 (05:00)
The effectiveness of stress test methodologies in ensuring adequate capital reserves, while creating low cost capital and maintaining liquidity in the markets, is a topic of ongoing debate. If stress tests are too limiting, the cost of capital goes up and it becomes difficult to trade, resulting in lower market liquidity.
Clips
The debate about how to conduct stress tests on banks to ensure adequate capital reserves while also maintaining low cost capital and market liquidity rages on.
27:42 - 31:31 (03:49)
Summary
The debate about how to conduct stress tests on banks to ensure adequate capital reserves while also maintaining low cost capital and market liquidity rages on. There are concerns that current stress testing methodologies may not accurately reflect true market risks and exposures.
ChapterThe Debate on Stress Testing in Banking
EpisodeE28: Current state of public & private markets, Archegos debacle, US debt issues, wealth tax & more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The collapse of hedge fund Archegos due to overleveraging is compared to the collapse of LTCM.
31:31 - 32:42 (01:11)
Summary
The collapse of hedge fund Archegos due to overleveraging is compared to the collapse of LTCM. The US government's own overleveraging is also called into question, given the country's debt surpassing 130% of GDP.