Banks Look Safer With Deposits
By Matt Levine
The business of banking, it is often said, is “maturity transformation,” or “borrowing short to lend long.” A classic simple bank funds itself with deposits — people put their money in the bank with the understanding they can withdraw the entire amount they put in at any time — and uses those deposits to make mortgages and loans that won’t be repaid for years. …Karen Petrou, a D.C.-based adviser to bankers and regulators at research firm Federal Financial Analytics, said the move likely poses no threat to the system, calling it a “relatively non-evil form of regulatory optimization.”