What does Eugene Fama mean "the amount of debt that's financed with equity isn't put aside"? I transcribed A Symposium with 2013 American Nobel Laureates at Embassy of Sweden, Washington - YouTube starting at 56:00.
The moderator, AAAS CEO Alan Leshner, claims

Locking up that kind of money would be hard for any

Eugene Fama cuts him off.

Wo Wo Wo. Now you're on weak grounds.

The moderator

In that case, I withdraw the offhand remark.

Fama explains

That's one of the worst fallacies in all this discussion actually.

Someone asks

Would you explain it?

Leshner attempts

Because it's expensive to use money?

Fama explains

It doesn't freeze...What determines the value of something is the assets out of the balance sheet. The amount of debt that's financed with equity, that's not put aside. That's financing assets on the other side. Then you have debt that's also financing assets on the other. So this statement that if they have more equity, they're going to put this aside. Nope. It doesn't happen that way. It gets invested in stuff.

Can someone pls elaborate Fama's answer?
Fama's idea is to look at the level of equity that would have been necessary in the last crisis and multiply by 1.1 and call that a starting point for a level of equity that makes the company safer from insolvency. He phrased it as adding 10 percent.
In Fama's view there will still be risk of insolvency. &quot;You have to watch them because they are very clever at getting around these things.&quot;
The actual quote from the other person is &quot;locking up that kind of money...&quot;.
Then Fama talks about the balance sheet but he's just making the point that even with regulation the assets as a whole still bear investment risk.  I would add, although he does not say it explicitly, &quot;because they are very clever&quot; he is suggesting it is not practical to consider assets as being locked up, frozen, or set aside.