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A check of the TBTFs finds Wells Fargo (WFC +0.9%) the only gainer amidst a floated report the...

A check of the TBTFs finds Wells Fargo (WFC +0.9%) the only gainer amidst a floated report the Fed and FDIC are weighing a doubling in the "simple leverage ratio." Wells already exceeds the 6% proposed ratio, but presumably BofA (BAC -2.8%), JPMorgan (JPM -1.3%), Citigroup (C -4%), Goldman (GS -1.7%), and Morgan Stanley (MS -3.1%) would need to halt or pare back dividends and buybacks should the rule be implemented. The financial SPDR (XLF -1.4%).
Comments (8)
  • Warren Buffetts top holding @ most recent 13F report.... WFC.
    21 Jun 2013, 12:06 PM Reply Like
  • Dont be naive... Regulators said "IF" they impose the rule they will give banks like 5+ years to fully implemented. This is a rumor and just a thought to gain political points.
    21 Jun 2013, 12:17 PM Reply Like
  • Someone has to buy back the "tapering" let go by the Fed. Make the TBTF banks buy them up to boost their capital structure, LOL. They made a killing on the bailout selling off the TARP preferred stock and warrants at a great profit but with that gravy train gone I guess this is the next scheme to unveil. How about funding the government the old fashion way - increase taxes!

     

    The banks should now counter this by forming a consortium, move off shore and borrow all they need from the Chinese direct and eliminate the US Treasury middle man.
    21 Jun 2013, 12:52 PM Reply Like
  • Your first comment (increase taxes) leads to your second comment (offshoring avoidance). The TBTF banks benefit from the cartel's moral hazard card(s), while the smaller regional and community banks are stunted (as is the broader economy).
    21 Jun 2013, 03:23 PM Reply Like
  • Not going to happen, why would the Fed allow all these companies to start returning capital, only to change the rules and make them hold more? It makes no sense.
    21 Jun 2013, 01:33 PM Reply Like
  • In Canada, I think the ratio is about 10 or 11%, up from 9%. Dont quote me on that. Anyways, when the Government in Canada made the increases law, they gave the banks $114 Billion in new money and access to another $161 Billion down the road - totally $275 Billion.

     

    If the U.S. government does increase the required reserve ratio, they will simply print the money and give it to the banks so that the new reserve ratio is met. It wont cost the banks anything.
    21 Jun 2013, 02:52 PM Reply Like
  • WFC CEO has been quite vocal on "being forced" to hold too many T-bonds and that they'd like to see a steeper yield curve supporting lending growth.
    21 Jun 2013, 03:10 PM Reply Like
  • This if approved would begin to be implemented starting 2015 and ending 2018. Tomorrow all would know what decison the Fed is making. Right now its not clear where a bank stands in terms of leverage coverage. Once the assets definition is out, then we can say where is the standing of each bank. Surely banks would prefer to make less buyback rather than reduction or non payment of dividend. I dont think there would any negative impact on the price of the share.
    1 Jul 2013, 07:52 PM Reply Like
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