Interview with Jean-Pierre Chevallier on the Banks’ Situation in France

by Fabrice Drouin Ristori, Acting-Man.com:

Introductory Remarks by PT:

Readers may recall that Mr. Jean Pierre Chevallier and Mish were heavily fined in 2013 by France’s financial market regulator AMF for allegedly having published “incorrect information about the leverage of Société Générale”. Mish’s account of the event can be found here. By issuing the fine, the AMF mainly achieved an increase in the popularity of Mr. Chevallier’s blog and as a result, his views about SocGen’s leverage probably attracted a lot more attention than they otherwise would have. Note here that his analysis merely eschewed the practice of ‘risk weighting’ assets, instead taking the bank’s published numbers at face value – which we incidentally believe is precisely as it should be (a more detailed explanation of his method can be found below). For example, in light of the sovereign debt crisis in euro-land, attaching a ‘zero risk weighting’ to government bonds seems a laughable practice (in the meantime, this non-weighted ratio is simply referred to as the ‘leverage ratio’, and new regulations that were designed to limit it have just been diluted again at the beginning of the year).

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