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Strategies & Market Trends : Value of Perfect Information
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From: gazelleclub2/22/2009 5:58:35 PM
   of 262
 
Bank Stress Test

Use leverage ratio. To calculate it, divide a bank's equity by its assets, much of which are loans. The lower this ratio goes, the shakier a bank becomes. For example, a 10% leverage ratio means the bank has lent out $10 for every $1 in equity it has. A 5% reading translates to $20 out for every $1 in hand. Regulators like to see a reading of at least 5%. Anything less than that and a bank could become toast.

Summary: less than 5% not good

WFC: 3.7%
C: 3.8%
BAC: 4.6%
JPM: 9.4%

time.com
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