Coming to bank stress tests: The impact of fines

With multi-billion dollar penalties for banks being thrown about like nickels and dimes - the latest being BNP Paribas facing a $10B hit - the ECB is considering adding the impact of fines to its stress tests, reports the WSJ.

The ECB is trying to asses whether lenders have set enough aside in reserves for the payouts. If banks were to be found wanting, it could mean the need for additional capital raises. BNP makes a good example: In February, it said it had $1.1B reserved for the U.S. penalty, but two months later warned this may not be nearly enough. Now the figure is up to $10B, and executives at banks all over are watching nervously.


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Comments (3)
  • lcrupp
    , contributor
    Comments (99) | Send Message
    This is nothing short of amazing. Here we have a global financial crisis that was created, arguably, by actions taken by the U.S. Government, and who's the whipping boy? U.S. and international banks !


    You can't make stuff like this up.
    3 Jun 2014, 10:01 AM Reply Like
  • DWD Investing
    , contributor
    Comments (13185) | Send Message
    Has nothing to do with the Gov-ment.


    "First of all the Community Reinvestment Act was first past in 1977 which makes it difficult to explain how it caused a boom that didn’t start until 20 years later. Secondly, it was far too small to have any impact on the market. An in-depth study failed to find any evidence that it was responsible. Only 6% of high risk loans were covered by Community Reinvestment Act. Thirdly, there was no federal incentive to force banks to give more commercial loans, yet 55% of commercial loans are underwater."



    Please post your links to your assertions.


    Oh, and, "You can't make this stuff up," Rush!
    4 Jun 2014, 09:56 AM Reply Like
  • candooman
    , contributor
    Comments (445) | Send Message
    Krupp, I disagree with you. Let us take one step backward. Who pushed hard on the US Government to change the rules (Glass Steagall Act) so they (commercial banks) can use saver's money again in risky investments that was prohibited by the GS ACT? The bankers! They wanted to compete with Investment Bankers.... and the US taxpayers and ordinary citizens lost and continue to suffer..... and not a single high ranking Banking Executive has been prosecuted.


    With BNP, it is a bit different because with BNP they wanted to make money doing forbidden transactions with rouge nations. They knew they were going against the sanctions and still went ahead.... thinking they were a European Bank and out of the reach of US Gov't.... and got caught.


    So far the US Gov't has been going after foreign banks and have been hard on them..... but not against US Banks. They have been easy on them. One reason is perhaps, as in the case of B of A, the Treasury and Fed forced B of A during the 2008 crisis, to take over Merrill Lynch and Countrywide so it does not go into bankruptcy and rattle the stock market.... as in 1929. B of A itself behaved properly but now have to defend the bad things ML and C did and suffer the punishment, hence, the US Gov't is giving it relatively light fines..... so far.
    4 Jun 2014, 10:22 AM Reply Like
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