Category Archives: Capital requirements

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Basel rules let equity vary widely among banks

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JP Morgan CEO Jamie Dimon claims European banks are calculating their risk more leniently than U.S. banks do. This makes U.S. banks have to run their operations with more equity than do European banks, and that eats into profits. Now … Continue reading

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Basel’s weak repo-related ratios get little attention

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While much attention seems to be focused on setting higher equity requirements for financial institutions, in hopes they can better survive a financial crash, little attention is being paid to the two rules that would deal directly with the financial panic of 2007-2008 and the run on … Continue reading

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Banks continue to try to game capital requirements

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To see why requiring investment and commercial banks to have more equity is a risky way to prevent the next financial crisis, one need look no further than the April 13 Wall Street Journal story “Deutsche maneuvers around new law.” … Continue reading

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Do repo and other risks still threaten the world economy?

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As regulators try to force commercial and investment banks to have more equity and less debt, by raising their capital requirements, the banks continue to find ways to evade the rules as they did leading up to the financial crisis … Continue reading

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New capital requirements possible for tri-party clearing banks

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The New York finance lawyer who blogs at Economics of Contempt is predicting the Fed will require the tri-party repo clearing banks, JP Morgan Chase and Bank of New York Mellon, to have enough equity, and enough ready cash or … Continue reading

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Study on crisis leverage barely mentions repos

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Most of the leverage in the shadow banking system comes from repurchase transactions, but a new study of the build-up of bank leverage 2000-2009 barely mentions it because of the difficulty of getting repo data. The study shows that commercial … Continue reading

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Admati: Banks will be stronger with more equity

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  Expanding on an August 27 study that urged regulators to require banks to fund themselves with much more equity and less debt, four economists said today that in the real world banks have both equity and debt, and moving to … Continue reading