Bank capital requirements are based on a mix of market values and book values. We investigate the effects of a policy … change that ties regulatory capital to the market value of the "available-for-sale" investment securities portfolio for some … banking organizations. Our analysis is based on security-level data on individual bank portfolios matched to bond …

the public, long-term systemic risk among banks tends to increase. From the dynamic perspective, bank penalties represent … long-term. In this respect, bank penalties resemble still waters that run deep. In contrast, a settlement with regulatory …