Post by Ozarks Tom on Feb 22, 2016 14:31:25 GMT
The Fed is upping the reserves on the big banks this year. After years of literally handing them billions to speculate in the markets, they finally have come to the conclusion maybe they're over extended, and vulnerable to a market crash. Gee, who'd a thunk it? Out of the 31 banks tested last year, the biggest 3 failed, with one bank handing out dividends amounting to 119% of their income. Sounds to me like rats packing their bags in a leaky ship.
Another possibility my cynical mind came up with, is the biggest banks might be behind this move in order to force the smaller banks into distress, where they could be absorbed by the big ones.
If this is truly an effort to get the "Too Big To Fail" banks on solid footing, the enormity of the problem would seem to be overwhelming after so many years of banks like Goldman Sachs acting like their good times would go on forever, that building back a balance sheet after it's been stripped to the bones by personal greed is unlikely.
If the banks had to show an honest balance sheet, with "mark to market" numbers, meaning valuing their assets and liabilities to their true values, they'd all be in distress right now. I know a couple who lost their house to their bank 2 years ago, a $750,000 liability to the bank, but the title still shows in their name. If the bank's books were honest, they'd have a $1.5 million swing into the red on it, so they just don't do the paperwork, still showing it as an asset. There's no telling how many others loans are non performing the banks are hiding, while the examiners ignore them.
The biggest US banks are bracing for a tougher round of stress tests from the Federal Reserve, which could crimp their plans for higher dividends and share buybacks.
The two-part exam, which became an annual event in 2011, is designed to assess whether banks have enough loss-absorbing capital to keep trading through a shock to the system similar to the collapse of investment bank Lehman Brothers in 2008.
next.ft.com/content/4555738a-d834-11e5-9ba8-3abc1e7247e4
Another possibility my cynical mind came up with, is the biggest banks might be behind this move in order to force the smaller banks into distress, where they could be absorbed by the big ones.
If this is truly an effort to get the "Too Big To Fail" banks on solid footing, the enormity of the problem would seem to be overwhelming after so many years of banks like Goldman Sachs acting like their good times would go on forever, that building back a balance sheet after it's been stripped to the bones by personal greed is unlikely.
If the banks had to show an honest balance sheet, with "mark to market" numbers, meaning valuing their assets and liabilities to their true values, they'd all be in distress right now. I know a couple who lost their house to their bank 2 years ago, a $750,000 liability to the bank, but the title still shows in their name. If the bank's books were honest, they'd have a $1.5 million swing into the red on it, so they just don't do the paperwork, still showing it as an asset. There's no telling how many others loans are non performing the banks are hiding, while the examiners ignore them.
The biggest US banks are bracing for a tougher round of stress tests from the Federal Reserve, which could crimp their plans for higher dividends and share buybacks.
The two-part exam, which became an annual event in 2011, is designed to assess whether banks have enough loss-absorbing capital to keep trading through a shock to the system similar to the collapse of investment bank Lehman Brothers in 2008.
next.ft.com/content/4555738a-d834-11e5-9ba8-3abc1e7247e4
