We all know that no one listens to what credit ratings agencies say, and that if you were buying up all of that RMBS eight years ago marveling at what a great deal you were getting on triple-A rated stuff, you had it coming. But wouldn’t it be neat if you could put the tiniest bit of stock into a credit rating? Wouldn’t it be great if the folks at Fitch and Moody’s and S&P actually had to do the things they get paid to do?
No progress—unless you consider this progress. No CFTC report on the things the CFTC reports on, joining all of the other reports that are not coming out. Still no concern that the lack of progress means there will be a default, even if John Boehner is now saying he wasn’t serious when he said he wouldn’t allow a default. Some people smelling opportunity. And a reminder that the Federal Reserve is not reliant on Congressional appropriations in a way that will be obvious to those whose ATMs dispense something other than $20 bills. Read more »
US banking regulators have released new proposals to require banks to have higher leverage ratios, counterintuitively meaning lower leverage, and you can go read them here, or read about them here or here. Briefly: in addition to regular Basel III risk-based capital requirements, banks are also subject to a backstop equity-divided-by-assets0 leverage test, and internationally the minimum is 3%, but in the US it’ll be 5% for the biggest bank holding companies and 6% for the biggest insured banks. The OCC estimates that the banks are in total about $84 billion or so short of that requirement, though they have five years to get there, so it’s not, like, go sell $84 billion of stock right now or whatever.1
The Fed is meeting in 11 days. Therefore, it is time to start speculating about what they will do/that they will do what you want them to do/that any prediction other than “sit tight” has more than a trace likelihood of coming true. And if not in 11 days, then in a month-and-a-half. Or in September. You know, eventually. Ben Bernanke did say “maybe” and “possibly” and “in the next few meetings,” after all. Read more »
Once upon a time, Blanche Lincoln was a United States Senator from Arkansas, which is no longer as friendly to Democrats as it was when she was first elected in 1998. So, facing a tough re-election battle in 2010, she pushed hard for a seemingly ill-advised rule forcing banks to hive off some of their swaps trading, believing that it would put her over the top.
It didn’t, and she got trounced. Now, Blanche Lincoln is no longer a U.S. Senator, but her swaps push-out rule survives as part of the Dodd-Frank law, much to everyone’s unhappiness. So everyone’s getting together to agree to put off actually enforcing it for a while. Read more »