Chairman of the Federal Deposit Insurance Corporation Sheila C. Bair on model-driven capital under Basel II

Ms. Bair details how the problem with model-driven capital under Basel II is that it relies on past performance, and they are only as good as data you put into them. Because it is based on past performance, it will not tell you how economic circumstances will change. Anticipation of worst-case scenarios is something currently being addressed. (1:07)
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