Comments on: Basel: the Sifi surcharge arrives http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: traducere daneza romana http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/comment-page-1/#comment-53718 Mon, 29 Sep 2014 14:04:31 +0000 http://blogs.reuters.com/felix-salmon/?p=8789#comment-53718 Simple and easy exclusive design

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By: dWj http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/comment-page-1/#comment-27996 Tue, 28 Jun 2011 19:13:01 +0000 http://blogs.reuters.com/felix-salmon/?p=8789#comment-27996 My impression is that, de facto, the capital requirement drops during recessions and financial shocks; the Fed doesn’t want to require immediate compliance or shut down banks when they’re hardest hit, and insofar as this is a rainy-day cushion, it makes sense to allow it to drop a bit when it rains. It would be nice to formalize this, though that may be very difficult to do for a number of different reasons. The rules need to be (presumably are?) coupled with an explanation of how a bank that is out of compliant is to be forced to come into compliance, e.g. over what time frame and subject to what penalties. Perhaps the Fed can just lend “equity” to any bank that is short at a 24% interest rate; a bank whose cost of equity is expected to exceed 24% for a sustained period of time should just be shut down, if at all possible, but other banks would find this a strong incentive to liquidate illiquid assets and reduce the loan portfolio subject to a rule that 95 cents on the dollar now is better than 96 cents on the dollar next month, but not than 97 (assuming a cost of equity somewhat below 12%). Well, maybe 36% would be better. But I think something of this qualitative nature would make sense.

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By: dedalus http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/comment-page-1/#comment-27983 Tue, 28 Jun 2011 00:51:00 +0000 http://blogs.reuters.com/felix-salmon/?p=8789#comment-27983 Bethany McLean is being obstreperous when she writes:

“If banks had more capital, wouldn’t they take less risk, because the bankers would have more to lose? I’m not sure the answer is yes….”

Huh? What is she “not sure” of? If banks had more capital, then imo they would *BE* less risky.

Higher capital requirements for banks will not, indeed, increase the “transparency in the valuation of their assets,” but it’s unreasonable to bemoan the former for not being the latter.

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By: willid3 http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/comment-page-1/#comment-27979 Mon, 27 Jun 2011 22:28:26 +0000 http://blogs.reuters.com/felix-salmon/?p=8789#comment-27979 not sure that bankruptcy was ever the concern for this. after all, if a bank only has capital 1/10 their loan value, creditors will get nothing more than that. the reason the FDIC exists and why bank runs aren’t a common every day occurrence is because depositors are protected. if they weren’t every one would be on the look out for signs their bank was going under. which really hurts the economy. its why banks should really be a boring business. with little to no risks. as opposed to what we have today, of the wild west version of banks. just like the days before the great depression. and the great bank collapse

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By: Kamekon http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/comment-page-1/#comment-27978 Mon, 27 Jun 2011 20:46:04 +0000 http://blogs.reuters.com/felix-salmon/?p=8789#comment-27978 Since you mention Citi … Note that, as of March 31, 2011, both Citigroup’s and Citibank’s Tier 1 Common ratios (11.34% and 15.13%, respectively) were comfortably above the required rates under Basel III (including the maximum SIFI surcharge). See pages 27 and 31 of Citi’s 10-Q for 1Q11: http://www.citigroup.com/citi/fin/data/q 1101c.pdf.

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By: ExaminerCarter http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/comment-page-1/#comment-27971 Mon, 27 Jun 2011 18:02:28 +0000 http://blogs.reuters.com/felix-salmon/?p=8789#comment-27971 Huh??

Have you forgotten so soon?

For immediate release November 23, 2008 Joint Statement by Treasury, Federal Reserve, and the FDIC on Citigroup

Washington, DC — The U.S. government is committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth. In support of this commitment, the U.S. government on Sunday entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital.

http://www.federalreserve.gov/newsevents  /press/bcreg/20081123a.htm

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By: GRRR http://blogs.reuters.com/felix-salmon/2011/06/27/basel-the-sifi-surcharge-arrives/comment-page-1/#comment-27955 Mon, 27 Jun 2011 12:00:37 +0000 http://blogs.reuters.com/felix-salmon/?p=8789#comment-27955 All this does is lessen the impact of a bankruptcy for its creditors, ever so slightly, and gives the world a slightly earlier signal of a potential bankruptcy, allowing for an earlier intervention.

Maybe that’s all they really wanted?

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