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Monday, September 7, 2009

Capital buffers for banks? Call from the G-20!

FT Article.

Don't know what this is supposed to mean. But, the Fed has done a good job with stepping in to add additional capital. Nothing is wrong with balance sheets aside from having some toxic assets on them and a few others have gone out of business. That's the nature of the business.

What this sounds like IS socialism. But, banks do need certain capital requirements to operate as lending institutions. So, the issue is more than capital buffers-- but investment and expansion criteria as it relates to capital on bank's balance sheets.

Essentially; how do banks assess making risky investments to what they have as cash on hand and is that enough to absord loss due to certain variables and exposure.
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