Balance Quote by Jerome Powell
“Legislative reforms in the 1990s and the public/private structure led managements to expand the GSEs' balance sheets to enormous size, underpinned by wafer-thin slivers of capital, driving high shareholder returns and very high compensation for management.”
About This Quote
Source Speech: Economic policy address, 1999
Deregulation and thin capital buffers allowed financial institutions to expand risk, leading to high profits and executive pay.
In simple terms: Weak oversight let banks grow dangerously.
Strengthen capital requirements and oversight.
Themes
Mood
Type
When to use this quote
- banking sector
- policy reform
- executive compensation
Key Concepts
Questions to Reflect On
- How to balance risk control with market dynamism?
- What safeguards prevent future excesses?
Over‑regulation can stifle innovation and credit availability.