New York Times (December 1)
Thomas M. Hoenig, President of the Federal Reserve Bank of Kansas City, writes that U.S. banks are still too big to fail. They need to be cut down to size. “More financial firms — with none too big to fail — would mean less concentrated financial power, less concentrated risk and better access and service for American businesses and the public.”
Tags: Banks, Regulation, Too big to fail, U.S.
Wall Street Journal (September 9)
Will financial regulators meeting in Basel this weekend provide a miracle? The Wall Street Journal hopes regulators decide to double or even triple the amount of capital banks are required to hold against losses. This would reduce the risk that taxpayers will again have to bail out the banks.
Tags: Banks, Basel, Regulators
Wall Street Journal (July 24)
The European bank stress tests leave one “not much wiser.” For fear of suggesting the EU’s bailout package is insufficient, the stresses did not include a test for a sovereign default. The tests were restricted to more modest (and less revealing) shocks. The tests, however, could have been even less useful. Germany opposed the public release of results for individual banks. In the end, Spain and several other countries won this argument so bank-by-bank data is available.
The European bank stress tests leave one “not much wiser.” For fear of suggesting the EU’s bailout package is insufficient, the stresses did not include a test for a sovereign default. The tests were restricted to more modest (and less revealing) shocks. The tests, however, could have been even less useful. Germany opposed the public release of results for individual banks. In the end, Spain and several other countries won this argument so bank by bank data is available.
Tags: Banks, Europe, Sovereign default, Stress tests
The Guardian (July 22)
The Guardian predicts some very dirty laundry will be hung out Friday evening. That’s when the results of stress tests on European banks will be released. At least “a few of the 91 institutions” will be found “unsound.” Otherwise, nobody will trust the tests. But if too many banks are declared sick, watch out for stormy markets on Monday.
Tags: Banks, Europe, Stress test
New York Times (May 2)
Lashing out at Wall Street Banks is now an American pastime, but the credit ratings agencies “bear as much responsibility for the financial crisis as the banks.” Largely forgotten is the role Moody’s, S&P and Fitch played. Investors and financial institutions would never have purchased as many mortgage-backed securities and collateralized debt obligations (CDO’s) had the raters properly warned investors that these were essentially “high-tech junk bonds,” rather than triple-A securities. Current proposals aimed at reforming the ratings agencies are not enough. The newspaper supports drastic steps to improve the ratings system.
Lashing out at Wall Street Banks is now an American pastime, but the credit ratings agencies “bear as much responsibility for the financial crisis as the banks.”
Largely forgotten is the role Moody’s, S&P and Fitch played. Investors and financial institutions would never have purchased as many mortgage-backed securities and collateralized debt obligations (CDO’s) had the raters properly warned investors that these were essentially “high-tech junk bonds,” rather than triple-A securities. Current proposals aimed at reforming the ratings agencies are not enough. The newspaper supports drastic steps to improve the ratings system.
Tags: Banks, CDOs, Fitch, MBS, Moody's, NRSROs, Ratings agencies, S&P, U.S., Wall Street