The Banking and Strategy Initiative

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Balancing regulation and recovery: Banks build up their case

WASHINGTON - NOVEMBER 23:  Securities and Exch...

Image by Getty Images via @daylife

Banks stem the rot

Among bank negotiations too there was good news all around too as the BAC settlement of $8.5 bln is now effectively behind them with all the provisions amounting to a $0.88 cents loss in Q2 and a profit number for Bank of America in H1. Unrelated though, The investment banks also did a good job with the social IPOs as Zynga filed a $2bln offering and Linked In jumped on recommendations by its underwriting banks this week. The expected commodities uptick fizzled out completely as the Greek vote got restructured and US Treasuries coast along to that ominous Aug 2 deadline ( Repayments are due August 4m in the US, in Greece by July 12)

The debit card fee cap under the Durbin amendment also got closer to becoming a law with signs of a lasting Dodd Frank regulation taking shape and the Cap upped by the government to $0.22 cents per transaction from the proposed $0.12 cents per transaction allowing banks to cut down notional losses on that to $ 6-8 bln esp if it could be defined as a fixed fee.

he Capital surcharge has been negotiated down to 2.5% for the institutions on the SIFI and the G-SIFI lists from a planned 7% that would have taken Tier I capital in larger banks to 14% and probably even obviated the need for closure of proprietary desks originally mooted to safeguard banking deposits and lien.

With Sheila Bair retiring on Friday, it just leaves Timothy Geithner in charge of Fiscal adjustments and Bernanke with the monetary policy miracles from here on. The rest is just swathes of foreclosure documentation and billions in fines to be negotiated and set right, but the BofA settlement will serve as an example too. The other tweaking of regulation is but done with minor hiccups in each clause and none implemented as yet Banks are definitely cutting staff by 10-15% except for someone like Morgan Stanley who did a bit too much a bit early and is now left without meaningful client trading at all

2 comments on “Balancing regulation and recovery: Banks build up their case

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    July 27, 2011

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    October 13, 2011

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