ML-Implode News - Bank Capital Ratios -- Bolstered After Crisis -- Begin Shrinking Once Again

After the crisis, regulators pushed banks to get stronger. The biggest U.S. institutions more than doubled their tangible common equity ratios -- to an average of about 8 percent of assets (or, by international accounting standards, closer to 6 percent of assets). That's an achievement, and better than in Europe, but the starting point was so low that they still fall short of what's needed. Researchers at the Minneapolis Fed, for example, estimate that capital would have to more than double again to bring the risk of bailouts down to an acceptable level.
Yet the political will to push for more equity is waning, as the plateau at the end of the chart indicates. After its latest round of stress tests in June, the Fed allowed banks to reward shareholders with billions of dollars in dividends and stock buybacks. Treasury Secretary Steven Mnuchin, apparently with President Donald Trump's backing, has made it clear he'd like to ease capital requirements. The cycle is turning.

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Bank Capital Ratios -- Bolstered After Crisis -- Begin Shrinking Once Again