Mayra Rodriguez Valladares, a financial regulations expert and managing partner at MRV Associates, said any risk-weight change would hinge on how far U.S. credit ratings would drop following a default, but also that banks would have few good choices in that scenario.
“You can try to raise capital, which would be horrifying in the middle of a default, or you can try to jettison riskier assets like securitizations or other investments that require more capital,” Rodriguez Valladares said. “It is just uncharted territory.”