Pandit: "Let's Talk Life After The Test"

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Follow along with Big Vik here.
- This thing caused a lot of individual stress along the way
- Finishing it is an important milestone
- This was a stress test to handle challenges, not end challenges
- If we stick to our strategy and execute like we've been executing we're going to be fine
- Personally, I'm just happy it's over...I know there a lot of people who feel that way...at least 300,000 of them (Ed. Hi-ooo).
- It demonstrates we've got the strength and the stability to handle whatever the economy throws out there
- You know what it shows? It shows we can go toe to toe with anyone out there. We knew we could but now the market knows it too.
- Our recent history didn't put us in the best possible light
- We didn't get the credit we deserve for cutting expenses
- This point is obvious but I'm still going to say it: we need to keep focussing on profitability
- You can now look at your clients with confidence
- It doesn't matter whether we make or lose money over the next two or three quarters.
- We want to pay back the TARP money with gratitude, as quickly as possible.
- Compensation is not about TARP; they're two completely different issues.
- Our core differentiator is our people and our talent
- I believe in competitive compensation and paying people for performance
- The government "really likes the company."
- We're going to be great. Just keep doing what you're doing.

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The Fed last night unleashed eight zillion pages of Basel III implementation on the universe and I'm tempted to be like "open thread, tell us about your hopes and fears for capital regulation." So do that! Or don't because it is super boring, that is also a valid approach. Still I guess we should discuss. Starting slow though. Banks have to have capital, meaning that they have to fund some of their assets with things that are long-lived and loss-absorbing, like common equity, rather than with things that have to be paid back soon and at face value. The reason for this is that the rest of banks' assets are funded with things that we really do want to be paid back soon and at face value, like deposits, and if the value of those assets declines you don't want those deposits to be wiped out. The rules say that you need capital equal to a percentage of your assets. The game is deciding (1) what that percentage is, (2) what is capital (proceeds from selling common stock, and actual earnings, yes, but, like, deferred tax assets?), and (3) how you count assets (you might want more capital to shield you from losses in, say, social media stocks than you would to shield you from losses in Treasury bonds, so regulators use "risk-weighted assets," so that $1 of corporate bonds counts as $1 of assets, $1 of Treasuries counts as $0 of assets, and $1 of Facebook stock counts as $3 of assets*). Anyway, here are the required capital levels: