Restoring Confidence in the Financial System: See-through-leverage: A powerful new tool for revealing and managing risk - Hardcover

RESTORING CONFIDENCE is a ground-breaking book in which a top mathematician, who is also one of the City of London's most experienced traders, and an experienced City banker explore how confidence in the global financial system was destroyed by the current banking crisis. Drawing on his first hand experience of steering the trading floor at a major European bank, Sean Tully together with Richard Bassett analyse the steps which led up to the crisis and pinpoint precisely one of the main causes of the lending bubble with whose consequences we are all now living today. The authors will explain the intricacies of the regulatory framework of Basel I and Basel II, the two landmark events in banking regulation which ironically laid the foundation for the current crisis. The authors will then show how a radical and new but easily understood measure of risk, revealed here for the first time, can prevent another such bubble from ever happening again. This new measure, called See-Through-Leverage or STL, could be used to restore faith in the financial system by allowing a rapid means of differentiating between potentially toxic and healthy "AAA" rated securities. Armed with STL, investors, rating agencies and regulators alike can cut through the complexity of economic modeling to the nub of the problem: leverage. RESTORING CONFIDENCE is a vital book for the international business community and interested observer alike. In a globally interconnected world, no-one in any part of Asia, Europe or the Americas can claim to be untouched by the crisis which is now unfolding. How could bankers have got their sums so miserably wrong? How could regulators and politicians have failed to see the storm coming? Above all, how can confidence be restored to get the wheels of the global finance machine working again? RESTORING CONFIDENCE has the solution.