Tags: dick | bove | rochdale | bank | reserve | global | recession

Bove: New Bank Reserve Rules to Spark Global Recession

Monday, 27 Jun 2011 12:49 PM

A recent recommendation for banks to set aside more capital to shield them from financial shocks will only throw the world back into recession, says Dick Bove, vice-president for equity research at Rochdale Securities.

Global regulators working under the auspices of the Group of Governors and Heads of Supervision (GHOS) have proposed requiring banks to set aside extra capital to serve as a cushion, depending on the banks' size and systemic importance.

Big banks will need to have 9.5 percent or even 10.5 percent tier 1 common equity ratios, if the proposal is adopted, Bove writes in a market note, CNBC reports.

Dick-Bove-3-thumb-200.jpg
Dick Bove
(Rochdale Securities photo)
Forcing banks to hike capital requirements will put those banks in a position to lend less, and more lending is needed to speed up global recovery, especially after the damage that money-printing stimulus measures and misguided regulatory policies have done to banks still reeling from the global recession.

"The legislators and regulators never understood what caused the financial crisis," Bove writes.

"They have never acknowledged their part in facilitating the events that led to the crisis. Now having failed miserably in meeting their responsibilities on the way in to the crisis, they are perpetuating their mistakes by over-reacting by swinging in every direction without regard to the consequences."

_____________________________________________________
Editor's Note: Alarming: Is a Second Great Depression Bearing Down on Us?
This gripping Newsmax investigative report reveals the truth about America’s economic future. Watch, learn, and receive a free Survival Guide ($49 value) for your personal financial future. This Video Tells All. Click Here to Watch.
______________________________________________________
U.S. bank regulators have said European financial institutions do need to exercise more constraint when cushioning themselves from risk.

"Just as troubling is that European banks continue to effectively set their own capital requirements using internal risk estimates,
unconstrained by any objective hard limits," says Federal Deposit Insurance Corp. Chairman Sheila Bair, according to MarketWatch.

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
StreetTalk
A recent recommendation for banks to set aside more capital to shield them from financial shocks will only throw the world back into recession, says Dick Bove, vice-president for equity research at Rochdale Securities. Global regulators working under the auspices of the...
dick,bove,rochdale,bank,reserve,global,recession
319
2011-49-27
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved