93 Words, Nearly Of Them Wrong
In the WSJ, The 93 Words That Could Unlock $200 Billion inwards Bank Capital. This could last a bully MBA in conclusion exam. Spot the errors:
Windfall? When a fellowship pays out dividends, the stock cost goes downwardly just past times the sum of the dividend payment.
Capital is non tied up. Capital is a origin of funds, non a purpose of funds. Capital is equity investment inwards the depository fiscal establishment -- people rank the depository fiscal establishment money, inwards render for a stream of dividends. Capital is non reserves -- cash lying around the vault.
Capital is already used for lending! Banks teach coin from equity holders, bond holders, together with deposits, together with lend it out. Capital requirements are nigh the ratio of sources of money. (At best, lower majuscule requirements would permit banks to borrow to a greater extent than coin without issuing to a greater extent than equity to lend. If they wanted to.) Capital is non reserves.
No depository fiscal establishment "holds" capital, together with I promise Mr. Dimon didn't genuinely order that, equally much equally he would similar lower majuscule requirements. Capital is non "held" similar reserves.
This article does reverberate nicely the full score of confusion inwards the ground nigh banking regulations. Colleagues contemplating clever complex schemes, stimulate got note.
"Tucked within a nearly 600-page legislative proposal to overhaul U.S.A. fiscal regulations are 93 words that could render a windfall for depository fiscal establishment investors seeking heftier dividends together with portion buybacks."
"Bank analysts at Barclays BCS -6.08% PLC guess $236 billion inwards majuscule is tied upward in operational direct chances at the iv biggest U.S.A. banks alone"
"Bankers ... desire to complimentary upward majuscule that could last returned to shareholders or used for to a greater extent than lending."
"Mr. Dimon added that U.S.A. banks instantly hold about $200 billion inwards majuscule against operational risk."(I made it easier amongst italics, all mine.)
Windfall? When a fellowship pays out dividends, the stock cost goes downwardly just past times the sum of the dividend payment.
Capital is non tied up. Capital is a origin of funds, non a purpose of funds. Capital is equity investment inwards the depository fiscal establishment -- people rank the depository fiscal establishment money, inwards render for a stream of dividends. Capital is non reserves -- cash lying around the vault.
Capital is already used for lending! Banks teach coin from equity holders, bond holders, together with deposits, together with lend it out. Capital requirements are nigh the ratio of sources of money. (At best, lower majuscule requirements would permit banks to borrow to a greater extent than coin without issuing to a greater extent than equity to lend. If they wanted to.) Capital is non reserves.
No depository fiscal establishment "holds" capital, together with I promise Mr. Dimon didn't genuinely order that, equally much equally he would similar lower majuscule requirements. Capital is non "held" similar reserves.
This article does reverberate nicely the full score of confusion inwards the ground nigh banking regulations. Colleagues contemplating clever complex schemes, stimulate got note.
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