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Non-Tech : Banks--- Betting on the recovery
WFC 87.13-0.2%1:22 PM EST
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To: Road Walker who wrote (1311)6/21/2011 4:16:12 AM
From: David C. Burns1 Recommendation   of 1428
 
The Big Banks Fight On
By SIMON JOHNSON
Today's Economist
The New York Times

The bank lobbyists have a problem. As the bankers busily rallied their forces to fight on debit cards and spent a great deal of time lobbying on Capitol Hill, they were doused with a bucket of cold water by Daniel K. Tarullo, a governor of the Federal Reserve.

In a speech on June 3, Mr. Tarullo implied capital requirements for systemically important financial institutions — a category specified in the sweeping overhaul of financial regulation last year — could be as high as 14 percent, or roughly double what is required for all banks under the Basel III agreement.

Whether the Federal Reserve will go that far is not certain; a capital requirement of an additional 3 percent of equity (on top of Basel’s 7 percent) may be more likely, but that is still 3 percent more than big banks were hoping for. (These percentages are relative to risk-weighted assets.)

The big banks are likely to mount four main arguments as they press their case against the additional capital requirements, Reuters has reported.

Each of the bankers’ arguments is wrong in interesting and informative ways.

economix.blogs.nytimes.com
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