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Regulators Let Big Banks Look Safer Than They Are
Keywords:
Sheila Bair, former head of the U.S. FDIC, points out flaws in the rules for capital adequacy ratios and risk weighted assets which allow banks to increase their capital adequacy ratios. The ratios show the financial strength of the banks and their ability to absorb losses, which makes their accurate calculation very important for the safety of the U.S. banking system, especially with large "too big to fail" banks. Bair says the 2013 U.S. Fed stress tests showed Bank of America as having a capital adequacy ratio of 11.4%, when it should actually be 7.8% without the risk weighted adjustment. The mortgage banking crisis showed how the risk wieighting can be flawed and give a distorted representation of the acutal risks facing the banks in its assets. For Morgan Stanley the 2013 stress tess by the U.S. Fed showed the capital adequacy ratio at 14%, taking out the risk weighting adjustment this drops to 7%. Bair says its not the idea of risk weighting that is the problem, but the way it is applied- for example considering sovereign government bonds in the eurozone as zero risk, or that only 20% of the accounting value of debt one banks buys from another bank is to be taken into account in setting the ratio. Go back to the drawing board she says, it makes no sense that Citibank debt be shown as having one fifth risk of IBM's.
Capital adequacy ratios for banks in 2013 and rules for "risk weighting" of assets which do not reflect real risks
07/10/2011
Sheila Bair says the U.S. Fed's 2013 stress tests of Bank of America and Morgan Stanley do not reflect the real risks taken on by the banks, because of the rules applied for capital adequacy ratios.
Grouped Articles
Short-termism and the risk of another financial crisis - The Washington Post
Washington Post 07/10/2011
Morgan Stanley Seeks a Fixed-Income Fix
Wall Street Journal 04/18/2013
Morgan Stanley Buys Its Way Back Into Investors' Good Book
Wall Street Journal 07/18/2013
Stressing the Bank 'Stress Tests'
Wall Street Journal 03/14/2012
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
Regulators Let Big Banks Look Safer Than They Are
Wall Street Journal 04/01/2013
JP Morgan Chase and the London Whale
04/10/2012
Trader Iksil at the CIO offices in London and the huge positions he had taken which were likely to lead to losses. Chase's denial that this was anything unusual.
Grouped Articles
Regulatory Headaches Worsen for J.P. Morgan
Wall Street Journal 08/19/2013
'London Whale' Penalties Put at $500 Million to $600 Million
Wall Street Journal 08/28/2013
Embattled J.P. Morgan Bulks Up Oversight
Wall Street Journal 09/13/2013
New York Times 10/15/2013
J.P. Morgan Reaches $13 Billion Tentative Deal with Justice Department
Wall Street Journal 10/20/2013
Record Pact Is on the Table, But J.P. Morgan Faces Fight
Wall Street Journal 10/21/2013
Risk management at JP Morgan Chase
05/14/2012
Grouped Articles
Wall Street Journal 05/04/2013
Regulatory Headaches Worsen for J.P. Morgan
Wall Street Journal 08/19/2013
Embattled J.P. Morgan Bulks Up Oversight
Wall Street Journal 09/13/2013
JP Morgan Reported Third Quarter Loss on Legal Costs
New York Times 10/11/2013
Red Flags said to Go Unheeded at Chase
New York Times 05/14/2012
The Lessons of JPMorgan's Trading Loss
New York Times 05/14/2012
The 2013 U.S. Fed stress tests of banks and the flawed capital adequacy ratios that do not represent real risks at banks
03/14/2012
Grouped Articles
Fed Publishes 'Stress Test' Procedures
Wall Street Journal 11/10/2013
Goldman and JP Morgan Satisfy Fed with Capital Plans
New York Times 12/02/2013
Stressing the Bank 'Stress Tests'
Wall Street Journal 03/14/2012
Regulators Let Big Banks Look Safer Than They Are
Wall Street Journal 04/01/2013
Sheila Bair, chairwoman, FDIC
01/15/2010
Sheila Bair provides leadership in efforts to reform the seriously flawed American financial regulatory scheme. She heads the FDIC.
Grouped Articles
The Power Behind the Throne at the Federal Reserve
New York Times 07/31/2013
Volcker Rule to Curb Bank Trading Proves Hard to Write
Wall Street Journal 09/10/2013
Panel Told of F.B.I. Efforts to Fight Financial Crime
New York Times 01/15/2010
A Call for More Regulation at Fiscal Crisis Inquiry
New York Times 01/15/2010
Wall Street Journal 02/18/2011
Bair's Legacy: An FDIC With Teeth
Wall Street Journal 07/07/2011
Disclosure efforts for stress tests of U.S. banks by the U.S. Federal Reserve in Feb. 2012
06/16/2011
The U.S. Federal Reserve's Daniel Tarullo pushes for disclosure saying it is critical for investors to have this information.
Grouped Articles
The Power Behind the Throne at the Federal Reserve
New York Times 07/31/2013
Fed Boosts Pressure on Banks Over Capital Levels
Wall Street Journal 08/20/2013
Fed Publishes 'Stress Test' Procedures
Wall Street Journal 11/10/2013
Stressing the Bank 'Stress Tests'
Wall Street Journal 03/14/2012
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
Lenders Stress Over Test Results
Wall Street Journal 03/05/2012
European Banking Authority E.U. Stress tests for banks in 2010 and 2011
10/02/2009
Stress tests for banks in Europe in July 2010 and in 2011.
Grouped Articles
Wall Street Journal 07/16/2011
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
EU's Top Banks Pass Stress Tests
Wall Street Journal 10/02/2009
Document Contradicts EU Bank Statement
Wall Street Journal 10/06/2009
Wall Street Journal 10/03/2009
Moody's Questions Spanish Banks
Wall Street Journal 10/14/2009
Michael Gibson, new chief of the U.S. Federal Reserve's regulatory division
01/21/2010
Under Dodd-Frank legislation the Fed was given the additional task of oversight of U.S. financial institutions. Gibson would play an important role in setting up stress tests for U.S. banks, regulatory supervision of banks, and representing th U.S. on the Basel committee.
Grouped Articles
The Power Behind the Throne at the Federal Reserve
New York Times 07/31/2013
Obama Presses Regulators to Finish Financial Rules
Wall Street Journal 08/20/2013
Fed Boosts Pressure on Banks Over Capital Levels
Wall Street Journal 08/20/2013
Obama Presses for Action on Bank Rules
New York Times 08/19/2013
Fed Publishes 'Stress Test' Procedures
Wall Street Journal 11/10/2013
Wall Street Adapts to New Regulatory Regime
Wall Street Journal 07/22/2014
Stress tests of U.S. banks by the U.S. Federal Reserve in 2012
11/22/2011
Grouped Articles
Fed Publishes 'Stress Test' Procedures
Wall Street Journal 11/10/2013
Stressing the Bank 'Stress Tests'
Wall Street Journal 03/14/2012
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
Wall Street Journal 11/23/2011
Fed Plans New Stress Tests for Biggest Banks
New York Times 11/22/2011
More Vigorous Stress Test for Banks
New York Times 11/23/2011
Citigroup efforts to to reduce risky assets- 2011-2015
01/15/2009
Grouped Articles
Quiet Boss at Citigroup Setting Tone for Wall Street
New York Times 12/01/2013
Wall Street Journal 02/07/2014
Failing Stress Test is Another Stumble for Citigroup
New York Times 03/27/2014
Citigroup Sells Stake in Turkish Bank for $1.16 Billion
New York Times 03/05/2015
Test Results Bring Relief to Citigroup
Wall Street Journal 03/13/2015
Shrunken Citigroup Illustrates a Trend in Big U.S. Banks
New York Times 04/15/2016
A Citigroup restructuring plan, and bank restructuring plans that were never developed by Treasury Secretary Geithner for President Obama
01/02/2009
Ron Suskind documents the making of key economic decisions in the Obama White House from 700 hours of interviews in his new book released in Sept 2011: "Confidence Men: the Obama White House, Wall Street and the Education of a President." In the book he says Obama asked Geithner to develop a plan for restructuring Citigroup after the bailout of Citi. A month later he followed up in a meeting, and was told by Romer at a meeting Geithner did not atttend, that no plan had been developed. The President's response was "it better be." Geithner says he was asked to do so but "fortunately there was never a need to put them in place."
Grouped Articles
New York Times 05/16/2010
A Conflict in Geithner's New Job- Not Exactly
New York Times 11/18/2013
Charlie Rose Talks to Robert Reich
BusinessWeek 10/21/2010
A Stress Test for the Latest Bailout Plan
New York Times 02/14/2009
Citigroup Hits 'Penny Stock' Realm
Wall Street Journal 03/06/2009
Obama, Geithner Get Low Grades From Economists
Wall Street Journal 03/11/2009
Citigroup restructuring under CEO Michael Corbat
01/15/2009
Grouped Articles
Citi's Profit Soars as Shift Pays Off
Wall Street Journal 04/16/2013
More Lights Switch On in the Citi
Wall Street Journal 04/16/2013
Citi CEO: Bank's Major Restructuring Is Over
Wall Street Journal 04/24/2013
A Citi Wall Thicker Than J.P. Morgan's
Wall Street Journal 07/16/2013
Wall Street Journal 07/16/2013
Growth in Emerging Markets Lifts Citigroup's Profit by 42%
New York Times 07/15/2013
Morgan Stanley credit ratings
10/14/2008
Grouped Articles
Morgan Stanley Memo by John Mack
Wall Street Journal 10/14/2008
Three Major Banks Prepare for Possible Credit Downgrades
New York Times 03/29/2012
Morgan Stanley Posts Loss on Charge
Wall Street Journal 04/20/2012
Wall Street Journal 06/22/2012
Morgan Stanley Spared a Sharper Cut
Wall Street Journal 06/22/2012
Ratings Downgrade Cuts Deeply at Morgan Stanley
New York Times 06/21/2012
Morgan Stanley risks 2010-2013
09/30/2011
Grouped Articles
Morgan Stanley Seeks a Fixed-Income Fix
Wall Street Journal 04/18/2013
Wall Street Journal 04/19/2013
Strong Earnings, Buyback Plans Boost Morgan Stanley
Wall Street Journal 07/19/2013
Morgan Stanley Buys Its Way Back Into Investors' Good Book
Wall Street Journal 07/18/2013
Gorman's Strategy Pays Off for Morgan Stanley
Wall Street Journal 10/20/2013
For Morgan's Gorman, No Need to Play the Hare
Wall Street Journal 10/20/2013
Bank of America performance 2010-2014
01/05/2009
Grouped Articles
Bank of America Gets Down to Business
Wall Street Journal 07/17/2013
Strong Trading Revenue Boosts Bank of America's Profit
Wall Street Journal 07/18/2013
Bank of America's Profit Exceeds Estimates
New York Times 01/15/2014
Bank of America Profit Climbs, Helped by Cost-Cutting Progress
Wall Street Journal 01/17/2014
Bank of America's High-Class Problem
Wall Street Journal 01/17/2014
Bank of America Swings to Loss on Legal Charge, Lower Mortgage Originations
Wall Street Journal 04/16/2014
A behind the scenes account of JP Morgan Chase CEO Jamie Dimon's discovery and response to large losses
01/15/2010
Dimon's first encounter with the losses at the bank was through an account of Chief Investment Office trader Iksil's trades in the Wall Street Journal on April 6, 2012. The trader was referred to as the "London Whale" and large losses were mentioned. This has raised questions about whether banks of the size of JP Morgan can even be effectively managed by a CEO. The decision by the U.S. Federal Reserve, Treasury and regulators to encourage the merger of failed financial firms Bear Stearns and Washington Mutual with JP Morgan Chase- ostensibly because no mechanism to wind down such firms existed- not only created a mega bank but also created additional risks from banks too big to manage.
Grouped Articles
Wall Street Journal 05/04/2013
'London Whale' Penalties Put at $500 Million to $600 Million
Wall Street Journal 08/28/2013
Embattled J.P. Morgan Bulks Up Oversight
Wall Street Journal 09/13/2013
Dimon Vows to Fix JP Morgan's Compliance Problems
New York Times 09/17/2013
New York Times 10/15/2013
J.P. Morgan Reaches $13 Billion Tentative Deal with Justice Department
Wall Street Journal 10/20/2013
JP Morgan Chase debt portfolio and asset allocation decisions similiar to proprietary trading
05/13/2012
Large shift in asset allocation since 2006, with significantly higher corporate bond holdings, creates more risk.
Grouped Articles
Embattled J.P. Morgan Bulks Up Oversight
Wall Street Journal 09/13/2013
At JPM: James and the Giant Reach
Wall Street Journal 05/13/2012
'London Whale' Rattles Debt Market
Wall Street Journal 05/13/2012
JPMorgan Chase Executive to Resign in Trading Debacle
New York Times 05/13/2012
Dimon's Fixer Is Trusted Veteran
Wall Street Journal 05/15/2012
Hedge or Bet? Parsing the J.P. Morgan Trade
Wall Street Journal 05/16/2012
Investments and risk management at J.P. Morgan Chase after the $2 billion trading loss in 2012
06/25/2012
Grouped Articles
Wall Street Journal 05/04/2013
Regulatory Headaches Worsen for J.P. Morgan
Wall Street Journal 08/19/2013
J.P. Morgan Unit Shifts Operations
Wall Street Journal 06/25/2012
JPMorgan Trading Loss May Reach $9 Billion
New York Times 06/28/2012
J.P. Morgan Second-Quarter Profit Fell 8.7%
Wall Street Journal 07/13/2012
At J.P. Morgan, Whale & Co. Go
Wall Street Journal 07/12/2012
Sheila Bair at the FDIC lauded for her anticipation and comprehensive approach to the banking and credit crisis.
04/30/2008
Officials at the Bush administration credit Shelia Bair of the FDIC for anticipating the credit and banking crisis way ahead of others and for developing a comprehensive approach to tackle it.
Grouped Articles
The Case Against the Bernanke-Obama Financial Rescue
New York Times 05/16/2014
Bair Proposal Seeks Government Loans To Aid Homeowners
Wall Street Journal 04/30/2008
Agency Floats a Proposal to Help With Home Loans
New York Times 05/01/2008
BusinessWeek 06/26/2008
IndyMac Reopens, Halts Foreclosures on Its Loans
Wall Street Journal 07/15/2008
FDIC Presses Bank Regulators To Use Warier Eye
Wall Street Journal 08/19/2008
The 2010 and 2011 EU stress tests that failed of Laiki Bank and Bank of Cyprus- origins of the banking crisis in Cyprus
07/16/2011
The two Cyprus banks passed the EU's 2010 stress tests, and passed them again in 2011, going on to give out dividends and increase their exposure to Greece, even as Greece faced a deepening financial crisis. The two banks increased their holdings of Greece's bonds by $1 billion in 2010, according to EU regulators, and took on more risks. The EU stress tests looked at how the banks would do in deteriorating economic conditions but did not consider the possibility of losses from sovereign government bonds.
Grouped Articles
Wall Street Journal 07/16/2011
Europe Fails Another Stress Test
Wall Street Journal 07/16/2011
IMF Chief's Change of Tune on Bank Capital
New York Times 09/14/2011
IMF Urges EU Banks To Raise Capital
Wall Street Journal 09/22/2011
Piraeus Bankâs Michalis Sallas Reaches the Top in Greece
New York Times 06/10/2013
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
EU stress tests for banks in 2011
03/18/2011
Grouped Articles
Wall Street Journal 07/16/2011
IMF Chief's Change of Tune on Bank Capital
New York Times 09/14/2011
IMF Urges EU Banks To Raise Capital
Wall Street Journal 09/22/2011
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
Banks, Regulators Still Jostling Over EU Stress Tests
Wall Street Journal 07/14/2011
Europe Needs Lesson in Stress Management
Wall Street Journal 07/14/2011
Fears that Basel III and European Banking Authority E.U. Stress Tests may not adequately reflect the risks on banks balance sheets.
01/21/2010
The situation after bailout of Irish banks in November 2010 by the EU. The Irish banks had passed European stress tests. Portuguese and Spanish banks may face a similar situation.
Grouped Articles
Wall Street Journal 07/16/2011
Europe Fails Another Stress Test
Wall Street Journal 07/16/2011
The Battle Over Bank Rules at Basel III
BusinessWeek 05/27/2010
Wall Street Journal 09/13/2010
Basel Rules Unlikely to Force Capital Raising
Wall Street Journal 09/14/2010
Wall Street Journal 09/14/2010
New Round of Bank Stress Tests in 2010-2011
11/18/2010
Grouped Articles
Wall Street Journal 07/16/2011
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
Fed Orders 2nd Round of Stress Tests
Wall Street Journal 11/18/2010
Dimon Calls Foul on Risk Models
Wall Street Journal 03/11/2011
Stress Rules Hit 2 German Banks
Wall Street Journal 04/13/2011
15 of 19 Big Banks Pass Fedâs Latest Stress Test
New York Times 03/13/2012
Stress tests of U.S. banks by the Obama administration.
05/06/2009
What the stress tests of the banks by the Federal Reserve did and what they failed to do. By coming up with amilder stress test after intense bargaining with the banks have the stress test adequately protected transparency? Have they muddied up the problem of putting banks on their feet by not taking the strong action to clean up balance sheets that is needed, and making it appear that banks are healthier than they actually are.
Grouped Articles
Fed Publishes 'Stress Test' Procedures
Wall Street Journal 11/10/2013
Stressing the Bank 'Stress Tests'
Wall Street Journal 03/14/2012
Stress Tests Won't Prevent the Next Financial Crisis
Wall Street Journal 03/19/2014
We Can't Subsidize the Banks Forever
Wall Street Journal 05/06/2009
Banks Need Fewer Carrots and More Sticks
Wall Street Journal 05/07/2009
Banks Need Funds, but Taxpayers May Not Have to Pay
New York Times 05/07/2009
Citigroup credit ratings
01/20/2009
Grouped Articles
Three Major Banks Prepare for Possible Credit Downgrades
New York Times 03/29/2012
Taking the Measure of Citigroup and Bank of America
New York Times 04/08/2012
Wall Street Journal 06/22/2012
Wall Street Journal 01/20/2009
Regulators Let Big Banks Look Safer Than They Are
Wall Street Journal 04/01/2013
Citigroup performance- 2011-2012
01/15/2009
Grouped Articles
Failing Stress Test is Another Stumble for Citigroup
New York Times 03/27/2014
Test Results Bring Relief to Citigroup
Wall Street Journal 03/13/2015
Citi Struggles to Return to Growth
Wall Street Journal 04/19/2011
Wall Street Journal 04/19/2011
Citigroup Instantly Becomes a $40 Stock
Wall Street Journal 05/10/2011
Profit Up 24%, Citigroup Seeks Global Growth
New York Times 07/16/2011
How debt can suddenly sink firms as business swings lead to a drying up of business.
10/14/2008
It can happen to GM and Chrysler, and a near miss for Ford and Morgan Stanley. Goldman Sachs is only pretending that it did not have a near miss after Lehman's collapse. The same can happen to an architectural firm Yamasaki as corporate real estate market collapses in 2009. The volatility and nervousness in financial markets in 2008 that shut companies out of credit markets and led to the government led auto industry bailout with planned bankruptcy filings.
Grouped Articles
A Warning Light to Alert the I.M.F.
New York Times 09/21/2011
After a Financial Flood, Pipes Are Still Broken
New York Times 09/14/2013
Morgan Stanley Memo by John Mack
Wall Street Journal 10/14/2008
Anatomy of the Morgan Stanley Panic
Wall Street Journal 11/24/2008
Wall Street Journal 03/14/2009
Morgan Stanley Comes Up Golden
Wall Street Journal 07/22/2011
The impact of rumors on share prices of financial stocks during the crises of 2008 and volatility in 2011-2013
10/10/2008
The impact of rumors on the share price of Morgan Stanley and other stocks.
Grouped Articles
QE2-Inspired Stock Rally May Soon Disappear
Wall Street Journal 08/08/2011
U.S. Bank Stocks Regain Their Allure
Wall Street Journal 01/06/2014
Morgan Stanley Memo by John Mack
Wall Street Journal 10/14/2008
New York Times 10/10/2008
Anatomy of the Morgan Stanley Panic
Wall Street Journal 11/24/2008
Morgan Tries To Quell Rumors About Its Stock
New York Times 10/05/2011
Morgan Stanley performance
07/22/2011
Grouped Articles
Morgan Stanley Seeks a Fixed-Income Fix
Wall Street Journal 04/18/2013
Wall Street Journal 04/19/2013
Strong Earnings, Buyback Plans Boost Morgan Stanley
Wall Street Journal 07/19/2013
Morgan Stanley Buys Its Way Back Into Investors' Good Book
Wall Street Journal 07/18/2013
Gorman's Strategy Pays Off for Morgan Stanley
Wall Street Journal 10/20/2013
For Morgan's Gorman, No Need to Play the Hare
Wall Street Journal 10/20/2013
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