"Big banks were hoping billions in dollars in future revenue would help them fill the capital holes found in the government's stress tests earlier this month. Now the [Fed] is limiting how much of that performance can be counted, according to people familar with the situation. The Fed's action of forcing Bank of America Corp. [BofA] to come up with billions in capital from other sources, these people said. ... The move by the Fed, which began notifying banks last week, has deepened tensions over the stress tests, which are intended to help steady the banking industry and shore up confidence in the financial system. ... But some bankers are complaining privately the government is changing the stress-test process arbitrarily. ... Fed officials were surprised by the [BofA's] statements, believing they had been clear that such projections wouldn't be allowed as part of the bank's capital-raising plan, according to people with knowledge of the discussions. Since then, [BofA] has been told that it won't be allowed to count the entire projections toward its capital needs, which the bank viewed as a changing of the rules, these people said", my emphasis, Dan Fitzpatrick at the WSJ, 28 May 2009.
I don't believe one word the Fed said. I conclude it wants to discredit the BofA's management and will do anything to that end. Arbitrarily? Surprised? I don't believe this.
2 comments:
Kinda flying apart at the Fed eh?
They have plenty of sticks to beat Ken Lewis with... since he and his bank are filled only with helium.
Who is auditing the Fed?
Now they are dethroning JPM and BONY as custodians... it's about time... it should have been done after 9/11.
Why not simplify the whole thing and just dethrone the Fed? Relieve them, and us, of the misery.
BTW: The Fed revamp re clearing banks is very curious given that Jamie Dimon is on the board of the NY Fed.
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