Twenty leading economists have published a letter in the FT, declaring:
The Basel III bank-regulation proposals that G20 leaders will discuss fail to eliminate key structural flaws in the current system. Banks’ high leverage, and the resulting fragility and systemic risk, contributed to the near collapse of the financial system. Basel III is far from sufficient to protect the system from recurring crises. If a much larger fraction, at least 15%, of banks’ total, non-risk-weighted, assets were funded by equity, the social benefits would be substantial. And the social costs would be minimal, if any.
According to Banking Day:
The 20 include the University of Chicago’s Eugene Fama and John Cochrane, the London School of Economics’ Charles Goodhart and Princeton’s Markus Brunnermeier. Fama’s presenece is significant because of his role as originator of the “efficient markets hypothesis”, a concept frequently cited by proponents of financial deregulation.
The Wallis architecture is now openly bankrupt, abandoned even by its philosophical parent.