Simple Smart Seminar
  • Stock
  • Investing
  • Politics
  • Tech News
  • Editor’s Pick
Editor's PickInvesting

Bank Capital Standards

by July 3, 2025
July 3, 2025 0 comment

Peter Van Doren

bank

The Federal Reserve Bank recently proposed to liberalize capital standards for large banks. Since 2014, the eight largest banks have had to maintain capital that was at least 5 percent of their total assets. The change would reduce that ratio to a range of 3.5 percent to 4.5 percent, a reduction in capital requirements of $13 billion, or 1.4 percent at the holding company level.

After financial crises and bank failures, capital standards are always increased. As memories of the last crisis fade, capital standards are eased. The 2008 financial crisis is no exception.

Even though increased capital standards sound like an appropriate regulatory response to financial crises, they may not even work. According to Columbia Business School Professor Charles Calomiris, in December 2008, Citigroup had a very high regulatory capital ratio of 12 percent but a market value of equity relative to its market value of assets (MVE/MVA) below 2 percent, reflecting the market perception that it was insolvent.

Calomiris proposes linking prudential regulation to the economic value of bank equity. Banks should raise equity in the market whenever a medium-term moving average of their MVE/MVA falls below a threshold, say 10 percent.

0 comment
0
FacebookTwitterPinterestEmail
previous post
Psychedelic Legalization
next post
White House wants Obama intel officials ‘held accountable’ for role peddling 2016 Russia hoax

You may also like

Is AI a Horse or a Zebra When...

July 28, 2025

The AI Action Plan: Taking AI Innovation Seriously

July 28, 2025

College Student Aid Theft

July 28, 2025

Can the White House Denaturalize Domestic Opponents?

July 25, 2025

An Updated Interview with George Selgin on Free...

July 25, 2025

Inflation Can Increase Capital Gains Tax Rate to...

July 25, 2025

Friday Feature: Edefy, “Pod Schooling Made Simple”

July 25, 2025

Yiwu: China’s Free-Market City

July 25, 2025

Chart Mania – 23 ATR Move in QQQ...

July 25, 2025

Man Admits to Medicaid Fraud—That’s Not the Worst...

July 25, 2025

    Fill Out & Get More Relevant News


    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Recent Posts

    • Chart Mania – 23 ATR Move in QQQ – Metals Lead 2025 – XLV Oversold – XLU Breakout – ITB Moment of Truth

      July 25, 2025
    • S&P 500 Breaking Out Again: What This Means for Your Portfolio

      July 24, 2025
    • Momentum Leaders Are Rotating — Here’s How to Find Them

      July 24, 2025
    • Is META Breaking Out or Breaking Down?

      July 23, 2025
    • A Wild Ride For the History Books: 2025 Mid-Year Recap

      July 23, 2025
    • Tech Taps the Brakes, Homebuilders Hit the Gas: See the Rotation on StockCharts Today

      July 22, 2025
    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 simplesmartseminar.com | All Rights Reserved

    Simple Smart Seminar
    • Stock
    • Investing
    • Politics
    • Tech News
    • Editor’s Pick