All Articles Finance While You Were Working - March 6

While You Were Working – March 6

Good news from the Basel Committee, Democratic senators conveniently forget what causes banks to go out of business, Citi aims for digital, and Real Madrid boots PSG

3 min read


Bank for International Settlements

Basel Committee report card gives most banks a passing grade on Basel III (Fabrice Coffrini/Getty Images)

Good news from the Basel Committee

The Basel Committee published the results of its Basel III Monitoring Report and the findings are positive:

“On a fully phased-in basis, data as of 30 June 2017 show that all banks in the sample meet both the Basel III risk-based capital minimum Common Equity Tier 1 (CET1) requirement of 4.5% and the target level CET1 requirement of 7.0% (plus any surcharges for G-SIBs, as applicable). Between 31 December 2016 and 30 June 2017, Group 1 banks continued to reduce their capital shortfalls relative to the higher total capital target levels; in particular, the Tier 2 capital shortfall has decreased from €0.3 billion to €24 million.”

The Monitoring Report also notes that a vast majority of banks are making the grade when it comes to Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). In fact the report, which grades banks on where they stood as of June 30, 2017, notes all the banks are already above the 90% minimum LCR that will become the standard later this year.

Financial crises don’t shutter community banks, the ensuing recessions do

Democrats in the US Senate are taking a moderate amount of heat for joining forces with Republicans to support a Dodd-Frank rollback. They probably have outrage fatigue to thank for not getting greater pushback from their constituents, but it is still worth taking a look at some of the data points Democratic senators are using to justify their votes.

Like this tweet from Senator Mark Warner, D-Va.:

First of all, I am not exactly sure who fed Warner that data point because the FDIC’s own website lists just 5 bank closures in Virginia since October 1, 2000 (including one before Dodd-Frank was passed and another just a month after the bill became a law).

By using the passage of Dodd-Frank as some kind of reference date, is Warner suggesting that the closure of a bank a month or so after Dodd-Frank became law can be blamed on Dodd-Frank? That is naïve and also ignores the fact that virtually zero aspects of Dodd-Frank that affect community banks were implemented quickly. Implementation was slowwwwww.

If you find yourself citing inaccurate and/or disingenuous data to support your vote on the floor of the US Senate, maybe you should re-think your vote.

Citi opts for digital over brick-and-mortar

I poked some fun yesterday at how JPMorgan Chase and Bank of America appear to be ignoring consumer trends in their push to expand the brick-and-mortar branch networks. Citigroup is going the other way and aiming for a “national digital bank.” Kudos to Corbat and crew.

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