IMF Says U.S. Financial System May Need $76 Billion in Capital
July 30th, 2010Your what hurts?
Via: Bloomberg:
The U.S. financial system remains fragile and banks subjected to additional economic stress might need as much as $76 billion in capital, according to the results of International Monetary Fund stress tests.
The findings, released today as part of a broader IMF report on the U.S. financial system, suggested that while the nation’s banking system is stable, it remains vulnerable. Home prices, commercial real estate loans and economic growth have the potential to cause shocks that could expose banks to more losses.
Under one scenario, small and regional banks as well as subsidiaries of foreign banks would need $40.5 billion in additional capital to meet a benchmark capital ratio of 6 percent Tier 1 common equity from 2010 to 2014. Under the adverse scenario, those needs rise to $76.3 billion, according to the report.
“Pockets of vulnerabilities linger,” the fund said in the report. The U.S. is recovering from what the IMF called “one of the most devastating financial crises in a century.”
What?! I thought the financial reform bill fixed all that!
Oh wait, that’s right, it hardly fixes anything.
The IMF isn’t producing reports about the situation because of some keen academic curiosity. They’re looking for an entree to do the same thing to the US that they’ve done to many other nations.
In a sense it’s poetic justice since the IMF is largely the creation of the United States. But to mix metaphors, when this cock comes home to roost we need to be figuring out a way to make Chicken Soup.