RG:I wouldn't call it more regulation as much as less reliance on self-regulation. Basel I capital requirements were simple and straightforward. Basel II relied more on internal ratings by banks, which were very complex mathematical models on the riskiness of their portfolios, which set their capital requirements. With Basel III, we're realizing we can't rely on these banks' complex models. But banks have gotten much bigger since the crisis deepened, meaning that if they were too big to fail before, they're way too big to fail now.
FA: It seems volatility is here to stay, which could create more financial crises.
RG: We need better safeguards in the form of regulatory and supervisory safety nets. I'm confident of our ability to do that. Whether we'll have the political will--both nationally and globally--is the question because memories are short.
FA: Your book seemed to be a case of life imitating art.
RG: I spent much of my career working on financial crises in emerging market countries. I wrote the book as a way of reaching a broader audience about financial crises and how they happen. To make the story more exciting, I had the idea that terrorists could use the financial system as a way to strike a blow against a way of life. Turns out we didn't need terrorists, because our own greed and stupidity were enough.
Improved Health: The Best Health Care Plan
Can't afford health care? Better start exercising and eating right, then. According to a recent survey from Sun Life Financial Inc., 53% of respondents said concerns over future health-care costs are motivating them to adopt healthier lifestyles through improved diet and more exercise, quitting smoking and reducing stress. Of that group, 12% said they have made major changes. The survey found these aren't all late-in-life converts to clean living--45% of thirtysomethings surveyed said they made health and lifestyle changes to reduce future long-term health care expenses.
Evidently, these folks have only an abstract notion about the future costs of health care because the survey found 92% of respondents either don't have a clue about what their health care costs will be in retirement or greatly underestimate those costs. Among them, 40% said they had "no idea" how much health care will cost, and just 8% estimated their costs at $200,000 or more, which Sun Life says is close to--but still under--industry estimates of roughly $260,000.
Moreover, 43% of respondents said they were "not at all confident" about meeting health care costs in retirement, and only 9% said they were "very confident." Consequently, it's not surprising that 74% of survey participants said they don't have specific plans to cover retirement health care costs.
And a small number of people (9%) said they've had to withdraw money from retirement savings, sell assets or borrow money to pay for a serious illness or medical procedure, and 51% of them don't think they'll ever replace what they spent.
The online survey of 1,525 respondents was conducted in March.