Big Banks, Leverage and the Smell Test

Federal Regulator's recently proposed tougher regulations for eight banks.  Will it hurt the economy?  Lobbyists for these banks think so.  My colleague, Joe Rizzi, says 'Not so fast'.  Read his interesting article that appeared in  the American Banker last week regarding Big Banks, Leverage and the Smell Test.

Increase Bank Dividends? Not So Fast

In a recent article published in the American Banker, I take a skeptical view of the practice of many banks that are currently seeking to return capital to shareholders via dividends and share repurchases.  

Although it was unthinkable a few years ago, some bankers and pundits believe banks have excess capital that should be returned to shareholders through dividends and stock repurchases. Banks have rebuilt capital positions from their depressed crisis levels largely through improved earnings from reduced credit costs. Lackluster returns on equity, limited investment opportunities and crisis-related curtailed payouts have raised the call for the return of perceived excess capital to improve ROE. ..... "   See the complete article at:  American Banker

J