PUBLIC ADVOCACY: The need for Bank Capitalization and Regulation

Gretchen Morgenson, NY TIMES 1/5/14, A roadblock to brawny Bank Reform. The need for tougher Capital Rules. ” It is unclear why the Fed is stalling on the leverage ratio to be maintained to prevent risk and create a Bank capital cushion that frees the public from another bailout? “Basel 3 will not be implemented till 2015, at the earliest, and they are considering scaling back the Capital requirements (FT Times 1/5/13) what protection is in place in the meantime?

“The leverage ratio is computed by dividing the Banks tangible common equity, a measure of a company’s readily accessible capital by total assets.”  Sounds like a good idea, but does Dodd Frank allow for disclosure and accountability of all derivative trades and off balance sheet transactions? The key is full accountability , transparency and responsible accounting, all of these are alien territory for The Banks. ” The proposed ratio would include large Bank holdings that are currently excluded from required capital calculations. These include trillions of dollars in derivative positions as well as assets carried by related entities that do not show up on the Bank’s balance sheet. “.

I’m a skeptic, knowing that shifting and shielding assets is the rule, how do we enforce accountability without precise guidelines for accounting by auditing firms with no conflict of interest. We know what happens if Banks are not held accountable. The People paid for Bank losses, by losing their homes, their jobs and their Middle Class way of life. Meanwhile, the Banks and Bankers have continued to party at the Public’s expense.

We can not rely on a Utopian concept for compliance. Banks account for 60% of our GDP and should be regulated and required to have more capital on hand then a Manufacturing Facility, which runs smoothly only when there is full accountability. Why do we ask less of Banks and Bankers, then we do of other sectors of our Economy?

Banks should have clearer, more accountable business practices because, as we have experienced over the last 5 years the recovery of the American way of life depends upon a lessening of Bank risk. Next time there is a Banking crisis only the Bankers and the shareholders should take a haircut?

It’s past time to become tough. Main Street has suffered too much and deserves to be bailed out as well. What do you think dear reader? We have choices to make, when Politics effects us all.

I concentrate on Financial Reform, because our monetary system affects us most.  We have no purchasing power unless and until the Banking cartels assume a less risky and a lessor percent of GDP, giving other sectors a chance to produce goods and services and jobs for more people.  We have a choice, a less risky Banking system, will provide loans and services to customers for the generation of jobs.

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