Bank/Thrift Supervision   |    Capital    |    CFPB    |    Deposit Insurance    |    Interchange    |    Mortgage Finance
Municipal Advisors   |    OCC-OTS Merger   |    Preemption    |    QM - QRM    |    Swaps   |    Volcker Rule    |    Full Topics List
Qualified Mortgage - Qualified Residential Mortgage
Consumer Financial Protection Bureau - CFPB
Bank/Thrift Holding Company Supervision
Deposit Insurance
Mortgage Finance
Municipal Advisors
OCC-OTS Merger
Volcker Rule
Corporate Governance
Financial Stability Oversight Council (FSOC)
Office of Financial Research (OFR)
Systemic Risk
Supervision and Oversight
Payment, Clearing and Settlement
Prudential Supervision
Trust & Securities
Asset-Backed Securities
Resolution Authority

Friday, August 23, 2013

Keating: You Can Have Too Much Capital

Although banks have become better capitalized since the financial crisis, there are capital levels that are counterproductive, ABA President and CEO Frank Keating said in yesterday's Financial Times. "When regulators set rules, they should not be surprised that banks naturally adjust to the incentives they created," he said. "Yet too often banks get blamed for making rational decisions based on the rules that have been set by their regulators."

Bankers believe in maintaining appropriate capital levels, Keating explained. But "capital comes at a cost -- both to banks and the economy at large in the form of foregone lending as institutions shrink to meet extreme capital-to-asset ratios," he said. Keating pointed out that loan levels have fallen over the past five years as U.S. banks have increased capital by over 21 percent.

"To tell banks they need more capital and then complain that some borrowers are not getting funding is a political statement, not an economic one," Keating added. "It's time to find the right capital rules for the risks taken, regardless of an institution's size or where it is located."

No comments:

Post a Comment

Please read our comment policy before making a comment.