Evergrande’s Regulatory Chief Says US Markets Are Strong, while Evergrande Lurches.
With Chinese real estate behemoth Evergrande on the verge of bankruptcy, the head of the US markets regulator said Tuesday that the financial system in the United States is more equipped than it was in 2008 to withstand the consequences of a massive bankruptcy.
“We are in a very interconnected global economic system,” Gary Gensler, the head of the Securities and Exchange Commission, said, “and it is probable that we, too, in America, may react to other economies’ and nations’ shocks from time to time” (SEC).
He declined to comment on Evergrande, the developer reeling under the weight of $300 billion in debt and appearing to be on the approach of bankruptcy.
On Monday, markets around the world plunged amid fears that the company might drag others down with it, but those fears appear to have subsided in Tuesday’s trading.
Gensler claimed the American financial system had been reinforced since the mortgage crisis more than a decade ago precipitated a global recession in a virtual interview with The Washington Post on Tuesday.
“I do believe that the changes implemented in the aftermath of the 2008 financial crisis resulted in a substantially stronger US financial system,” he added, referring to the Dodd-Frank legislation, which required banks to bolster capital to protect against unforeseen disruptions.
“By 2021, we will be in a better position to absorb some of those shocks than we were before the 2008 financial crisis,” he said.
“It doesn’t mean we’re alone,” he said. Our economy are interconnected all around the world.”