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re: Why are banks hoarding so much $$$?
Posted on 6/19/14 at 7:52 pm to Reubaltaich
Posted on 6/19/14 at 7:52 pm to Reubaltaich
The stress tests the Fed has been performing on the big banks gives the banks an incentive to keep much higher deposits on reserve with the Federal Reserve. The stress tests' capital ratios are computed on 'risk adjusted assets' so higher risk assets, such as loans, require more capital to absorb any potential losses.
Deposits with the Fed are risk weighted at zero % so the banks don't have to set aside capital for those assets making it easier for them to meet the Fed's higher capital ratios and also helps them pass the stress tests the Fed puts them through.
Deposits with the Fed are risk weighted at zero % so the banks don't have to set aside capital for those assets making it easier for them to meet the Fed's higher capital ratios and also helps them pass the stress tests the Fed puts them through.
Posted on 6/20/14 at 12:08 am to LSURussian
Russian, is it true that the Fed Reserve doesn't "stress test" for a rise in interest rates?
I forgot where I heard that, but isn't that a pretty important thing to test for?
I forgot where I heard that, but isn't that a pretty important thing to test for?
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