Saturday, March 8, 2014

Banks’ Safety Isn’t Standardized



Banks in Europe and America are always under pressure to add to capital, with stress rests, in order to withstand any potential, future credit problems.

Risk-weighted assets can be assumed to be as high as 70% of total assets in the large U.S. banks. The stress figure in Europe is half that for various accounting reasons; which are not that strong.

In other words, bank safety assessments are pretty much subjective.

Furthermore, it’s all nonsense. As panic-driven problems negate supposed cushions as will a tendency to have mark-to-market accounting.

Much of what goes on is political maneuvering and posturing.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

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