And the regulators invented the Basel system of risk-weighted capital ratios, which stipulates different leverage ratios for different categories of loan, in theory to take account of the riskiness of those loans.
However, it may also present an opportunity for regulators to leverage the banks into getting much more aggressive about loan mods and short sales, potentially presenting some lasting housing market solutions.
Some examples of Recovery Act programs that leverage other investment funds are tax credits for advanced energy manufacturing, loan guarantees for small businesses, and interest subsidies for state and local borrowing to finance essential infrastructure projects.