Did John H. Cochrane, a professor of economics at Chicago, wrote:
In order to make $100 of loans, a typical bank borrows $97—from depositors, from money-market funds, from other banks, or from bondholders—and sells $3 of stock, its "capital." So if only 4% of the bank's loans fail, the shareholders are wiped out, and the bank cannot pay its debts. Worse, if there is a rumor that some loans are in trouble, creditors may "run," each trying to get his money out first, and force a needless bankruptcy. Think of Jimmy Stewart in "It's a Wonderful Life."
Putanumonit claims on his blog that the 3% is wrong:
As Cochrane was writing those words, in March 2013, the average equity ratio of US banks was 11.2%, up from 6% in the late 1980s.
Let me repeat that: economics professors who wrote a book about how raising equity ratios will solve the problem of financial crises got the actual equity ratio for banks, a number that is publicly reported and easily googlable, wrong by a factor of 4.
Does Putanumonit charge have merits or is there an apples-to-oranges comparison?