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Unregulated Leverage and the 2008 Financial Crisis

Rob Baston

35 years: Securitisation

Rob provides a background to the current banking system by discussing how money is created, and how it impacts ROE and bank regulation.

Financial Crises

Banking essentials

Rob provides a background to the current banking system by discussing how money is created, and how it impacts ROE and bank regulation.

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Unregulated Leverage and the 2008 Financial Crisis

13 mins 59 secs

Overview

Under Basel I, securitisation not only provided banks with plentiful cheap funding to lend, but also allowed banks to reduce the capital they required for the assets they sold to securitisation companies. This led to a spiral of increasing leverage in the banking and investor or shadow banking systems.

Key learning objectives:

What is money, and where does it come from?
How did the crisis impact Northern Rock?
How did Bank regulation impact ROE and leverage?

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This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.

Summary

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Expert

Rob Baston

Rob has worked in banking for almost 40 years. He has spent the vast majority of his time in the industry at UBS, where he is now a Managing Director working on specific private projects for the firm and acting as a senior advisor. Prior to this role he ran the Capital Solutions team at UBS, advising European banks on placing AT1 and T2 capital, debt for equity recapitalisations and rights offerings. Prior to working in the industry, Rob completed his D. Phil in Mathematics at the University of Oxford.

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