The financial industry throughout history has borne witness time and again to acrophobic highs and black dog lows driven by the possessed spirits of market participants. Be it tulips, stocks or packages of subprime mortgages, the historical analogies and clear excesses are easy to discount in the moment. Yet no sooner has the dust settled than we begin to see the next wave of possessed spirits — those looking to make well-intentioned, but ill-conceived, changes to ensure that the same crisis never happens again.

As the global economy emerges from the greatest financial crisis of our lifetime, the Bank for International Settlements through the Basel Committee on Banking Supervision has designed proposals — commonly known as Basel III — intended to strengthen capital and liquidity requirements for the global financial system.

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