division_name: Communities and Local Government &#8212; New Clause 9 &#8212; Leverage ratio
motion: <p class="" pid="c.102.2/1" pwmotiontext="yes">I beg to move, That the clause be read a Second time.</p>
  
  <p class="" pid="c.102.2/2" pwmotiontext="yes">It is a delight to see the Leader of the House on the Front Bench to debate with me the question of the leverage ratio&#8212;I favour the pronunciation, &#8220;leaverage&#8221;&#8212;and I am happy to give way to him if he has any concerns about it. As the Leader of the House&#8212;<i>[</i><i>Interruption</i><i>]</i><i>&#8212;</i>and, indeed, the Minister will know, a bank&#8217;s leverage is the ratio of its assets to equity capital. Its equity capital is equal to the value of its assets, minus the value of its liabilities. Higher leverage rates magnify returns, because any growth in assets will be proportionately greater if equity is thin, but&#8212;and this is why it matters&#8212;the corollary is that any losses are magnified if leverage is greater. Its equity can be wiped out by a smaller shock than would wipe out the equity of a less leveraged institution.</p>
  
  <p pid="c.113.4/1" pwmotiontext="yes"><i>Question put, </i>That the clause be read a Second time.</p>
  
  <p class="italic" pid="c.113.4/2" pwmotiontext="yes">The House divided:</p>
  
  <p pid="c.113.4/3" pwmotiontext="yes">Ayes 211, Noes 271.</p>