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Fed Governor Daniel Rarullo emphasizes the need for transparency and release to the public of stress test information. The goal he says is to release "this kind of standardized comparable information on a regular basis so that it's not a momentous event."

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Republicans have supported less regulation. After the 2009 financial crisis with faulty mortgages and excessive leveraging one would expect that there would be a shift among Republicans favoring necessary regulation of banks. This did not happen after the Obama administration failed to articulate a new culture after 2009 and lost control of Congress in 2010 by as much as 64 seats in the House 6 in the Senate, and in all demographic and income groups. The result was that the 2009 crisis changed some laws but not the culture of laissez faire that less regulation was better for the economy. It is left to president Biden to tackle this problem of culture and the Silicon Valley Bank clearly shows that the parts of the Republican and Democratic parties that support less regulation even where the regulation is essential for a good economy for workers and families, are self serving. No where is this culture of laissez fairre in its other manifestation in not planning for the US manufacturing base to be strengthened by government action more evident than in the way it has prevailed to turn a blind eye to not just sending manufacturing overseas, but over concentrating it in one country China with additional supply base from Japan into China. This is the challenge that the country faces- only if the culture or mindset changes will laws have the needed impact.  This report in the NYT shows that when president Trump appointed Randall Quarles to vice chair of banking supervision in 2017, Congressmen both Republicans and Democrats believed that less supervision was better for the economy. Democrats such as Congressmen Barney Frank were themselves part of the new culture when Frank joined Signature Bank's board in 2015, one of the banks that along with SVB bank caused the banking crisis of 2023. Its association with risky crypto assets is considered by the WSJ as being one reason the government decided to close it. Frank did not see this aspect of its risk insisting that the bank was in sound condition.  This culture is also manifested in its approach to the cost of living crisis and support for workers and families. The Biden administration sees the problem of culture and of clearly making the changes that create a new culture, and a new understanding of what is right for America, for its economy and for its role in the world, and best for its people.   ...

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In China's state banking system larger banks will get more state support than the smaller banks. Smaller banks such as Everbright Bank and Bank of Nanjing have 20% of loans made to local government financing vehicles, this compares with 6-7% for larger banks such as ICBC, Bank of China, China Construction Bank, and Agricultural Bank of China. Because of the poor asset quality and high risk of such loans the smaller banks are likely to be the first to face trouble in a financial crisis.

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The FDIC Board approved a draft rule, written jointly with six other regulators, that requires large financial firms with assets over $50 billion to hold onto at least half of top executive's bonuses for three years or longer. The goal is to tie the final payments to the results shown of the employee's trades and other decisions in the three years. FDIC chairwoman Shelia Bair, says this will ensure that safety and soundness practices are followed in large financial firms.

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Efforts in Congress totoughen the requirement on banks to prevent future crises. This reflects popular anger about the lax regulation and requirements on banks under the Bush and now under the Obama administration.

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Too big to run is where the banks are today. Excellence in management would help, but banks have just grown too big, bigger than even before the crisis. Bank of America's 2.3 trillion dollars in assets is 10 times the size of Exxon says the Econmist, and they need to shrink and simplify things. And even with the deities at Goldman Sachs the bank remains a black box.

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The US Fed under Jerome Powell stress tests of 31 banks for 2024 shows the banks can withstand a rise in unemployment to 10% and 36% drop in house prices. This is relevant now that the new administration of DJT makes another effort to correct the huge trade imbalance with China, Mexico and Canada, which itself is destabilizing in the long run and needs to be addressed. The first term of DJT failed to correct the imbalance with new tariffs kept in place by the Biden administration. This is not just one's imagination, reports suggest China has poured $230 billion of subsidies into its EV industry since 2003 mandate given by premier Jen Biao to dominate that industry. And now has capacity of 20 million car production a year, twice the domestic demand in gasoline cars, wanting to send the surplus production to the US and Europe. This isn't the 1930's type of tariffs, it is simply to get a fair even playing field for trade, where no one side is massively subsidizing and dumping which is one of the principles of WTO free trade that is being broken by China and Mexico. Specifically the anti dumping clause in Article 6 of the 1994 GATT agreement on free world trading mechanism to ensure free and fair trade. ...

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Efforts by banks to bring their operations in line with regulator requirements. The Citigroup bank much smaller than at the time of the financial crisis, with its "living will" approved by the U.S. Federal Reserve in April 2016.

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523 European banks borrowed 489 billion euros from the European Central Bank on Dec. 21, 2011, under the newly created Long Term Financing Operation of the ECB. This is designed to meet the financing needs of European banks which are shutoff from normal financing of selling unsecured bonds to private investors because of market anxiety. Much of this is for replacing other outstanding ECB loans, with analysts estimating about 190 billion euros of new liquidity being injected into the banking system. This also has the effect of reducing the borrowing rates for government bonds. In Spain the government sold 5.6 billion euros of government bonds at an auction on Dec. 20, 2011, with the interest rates dropping from 5.7% a month earlier to 1.7%. Small and midsize banks in Spain helped surging demand by buying the bonds to use as collateral for three year loans from the ECB at 1%.

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The ECB's second phase of the Long Term Financing Operation provides 800 European banks with 529 billion euros in 3 year loans at 1%. The impact of the first phase in Dec. 2011 with 489 billion euros in loans was greater on borrowing rates for Italy and Spain than it was this time. The larger number of banks participating in Feb, 2012- 800 banks compared to 523 banks- with many smaller banks included, is expected to provide a boost for lending to small and midsize businesses in Europe. The total net amount of liquidity added as a result of the operation in the two phases is expected to be 520 billion euros, as some of the loans were a transfer of existing loans to the longer term 3 year loans provided under the Long Term Financing Operation. The operation has helped bring confidence to the European banking system and will help the recapitalization of European banks.

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Exchange of remarks between Ben Bernanke of the Fed and James Dimon of JP Morgan Chase Bank on regulation and new capital reserve requirements for large U.S. banks. Fed governor Tarullo has proposed a 14% requirement of capital reserves for banks that are "too big to fail."

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After 3 by-elections in Toronto and Montreal Carney likely to have slim majority in Canadian parliament with 173 seats. The Liberals party has a 10-15% lead over the next party the Conservatives. Under Justin Trudeau Liberals had fallen behind the Conservative party in polling, only to be revived by Mark Carney of the Central Bank of England who sidelined some of the more controversial parts of Trudeau policies and gaining a big win in the recent elections. Carney has tried to find a way to keep Canada independent of US policy and able to chart its own path in the face of US tariffs and trade policy.

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The Large Institution Supervision Coordination Committee (LISCC) was setup by Fed chairman Bernanke and Fed governor Tarullo, in 2010. The Fed's 200 PhD's, bank examiners and other experts at headquarters are now tapped for the the task of looking at adverse scenarios, checking on assumptions made by the banks in their analysis, requesting data from large banks on their loan and securities portfolios, and asking banks to consider adverse scenarios. Such adverse scenarios include a decline in the U.S. economic growth of 1.5% in 2011, and decline in housing. The Fed checks the banks estimate of its financial position aginst the Fed's own standard and prods the banks to consider new risks. Before the 2008 crisis the Fed's 12 Reserve Banks did the day to day supervision and reported back to Board of Governors, a system that led to a diffusion of responsibility and did not work. Former Fed vice chairman, Alan Blinder, says the bank boards did not exercize responsibility, and "blew it, big time," during the financial crisis. This approach has the effect of acting as a early warning for the banks for things that could go wrong. J.P. Morgan Chase CFO Braunstein made a Feb 15 presentation to show that Chase's stress scenario was more stringent than the Fed's. The current review says Tarullo includes asking banks to do a check before issuing dividends to shareholders, and consider what would happen if the economy is in trouble in the next 9 quarters. According to Fed guidelines issued in November if the bank's plan does not show enough capital to handle economic, regulatory and lending risks, the Fed can challenge the bank's decision....

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Assistant U.S. Attorney at the Fresno office, Richard Elias, spots a JP Morgan Chase bank memo in 2012 after looking at many documents. This starts the process leading to the large settlements of $37 billion with U.S. banks in 2014. The memo used words such as "fallout," "kick" and other words clearly showing the banks were aware of the serious risks associated with the securities and the fallout expected. By 2012 the Obama administration felt the pressure from Democrats in Congress to show results in prosecution of banks for schemes related to packaging of highly risky mortgages into securities that led to the 2008 financial crisis. The Justice Department senior staff, Mr. West and Mr. Cole decided to focus on this incriminating evidence for JP Morgan Chase, Bank of America and Citigroup. Most of 2013 was used for preparation of the cases against the bank which were prosecuted using the Financial Institutions Recovery, Reform and Enforcement Act of 1989. Firrea has provisions not contained in other legislation, to get huge settlements as penalties, with extended time period for enforcement, when damage was done to financial institutions. The resulting effort led by Attorney General Holder led to the largest part of the total $128 billion paid in settlements by U.S. banks for cases related to the 2008 financial crisis....

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Regulators at the U.S. Federal Reserve and the FDIC are planning to reject the "living wills" plans of 4 of the 8 systemically important banks, including JP Morgan Chase bank, in April 2016. The banks will have to come up with revised plans and strategies to address bankruptcy and issues raised by regulators, or face sanctions including higher levels of capital required.