Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (97158)	4/30/2009 10:40:53 AM
From: Paul Kern	Respond to of 116555

Then their are the Fed or Basal Bank rules on how much capital a bank must have as a percent of their total loans (assets) outstanding. This I thought was 5.5%. If remember correctly, Basel II lowered it to 4.0% from 6.0%

To: rich evans who wrote (97158)	4/30/2009 12:43:02 PM
From: Elroy Jetson	Respond to of 116555

Basel II requires bank owner capital of different levels depending upon the level of each Risk Tier of the banks loan exposure. The limiting factor in prudent banking has to be the level of bank owner's contributed capital plus retained earning at risk. In other words the common shareholders. Preferred Shareholders and bond-holders are debt holders are not truly contributing capital, so should not be used to determine the maximum level of allowed loans outstanding. The most laughable comment came last week from the CEO of PNC Bank who apparently believes depositors are contributing bank capital “We’re comfortable with the balance sheet as it is,” PNC Chief Executive Officer James Rohr said in an interview yesterday, adding that, the bank isn't worried about capital adequacy because it is mostly funded through customer deposits. bloomberg.com . Stress-Tested Banks May Struggle as Bad Assets Triple Reserves required to be held with the Federal Reserve, which has little to do with prudent banking, are now being reduced to zero the last I knew, with interest now paid by the Fed to those banks who hold reserves there. Fed Reserves are merely the way the Fed controls the total money supply. .

To: rich evans who wrote (97158)	4/30/2009 1:49:06 PM
From: mishedlo	12 Recommendations Read Replies (2) \| Respond to of 116555

Greenspan authorized sweeps in 1994. Sweeps allow Demand Deposits Accounts (checking accounts) to be systematically "swept" from checking accounts into savings accounts unbeknown to the checking account holder. Savings accounts have zero reserves. So... In actual practice there is almost no money backing up checking accounts, none (beyond what banks THINK they need historically). You can thank Greenspan for this. This is not "Laissez Faire" economics or Libertarianism. This is blatant fraud, something that Elroy and others blaming Libertarianism need to understand. Such a construct would never flourish in a free market. It takes a regulator like Greenspan to allow it. Mish