Europe's highly touted stress tests of major banks earlier this summer understated holdings of potentially risky government debt, The Wall Street Journal reported Tuesday.
An examination of the banks’ disclosures indicates that some banks didn’t provide as comprehensive a picture of their government-debt holdings as regulators claimed. Some banks excluded certain bonds, and many reduced the sums to account for “short” positions they held — facts that neither regulators nor most banks disclosed when the test results were published in late July.
Because of the limited nature of most banks’ disclosures, it is impossible to gauge the number of banks that excluded portions of their sovereign portfolios from their disclosures, or the overall effect of that practice.
The original Wall Street Journal article here, requires a subscription.
The European Bank Stress Tests are in. These are the results from 91 EU banks, which are 65% of the sector.
The aggregate Tier 1 ratio, used as a common measure of banks’ resilience to shocks, under the adverse scenario would decrease from 10.3% in 2009 to 9.2% by the end of 2011 (compared to the regulatory minimum of 4% and to the threshold of 6% set up for this exercise). The aggregate results depend partly on the continued reliance on government support for currently 38 institutions in the exercise.
The aggregate Tier 1 ratio incorporates approximately 197bn € of government capital
support provided until 1 July 2010, which represents 1.2 percentage point of the
aggregate Tier 1 ratio.
As a result of the adverse scenario after a sovereign shock, 7 banks would see their
Tier 1 capital ratios fall below 6%.
The threshold of 6% is used as a benchmark solely for the purpose of this stress test
exercise. This threshold should by no means be interpreted as a regulatory minimum.
All banks that are supervised in the EU need to have at least a regulatory minimum of
4% Tier 1 capital.
The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.
The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction.
Ok, Wall Street Journal. Firstly, how much will they use to pay down the deficit?
Secondly the losses projected vary widely. Now the WSJ reports the total losses will be about $200 Billion, down from $341 Billion, but this is just the original $700 Billion in TARP funds.
Deep Throat: "No, I have to do this my way. You tell me what you know, and I'll confirm. I'll keep you in the right direction if I can, but that's all. Just... follow the money".
The trail of money will usually confirm where a crime has been, or is about to be, committed.
the state will suspend business with Bank of America Corp. until the lender restores credit to the shuttered Republic Windows & Doors company in Chicago where workers are staging a sit-in.
Having crossed BofA the next day his scandal broke (midtowng posted a very good article on this)
Who is the bankers bank? The Federal Reserve. And who is the latest person to cross the bankers bank? Ken Lewis.
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