Fed Instructs Biggest Banks to Hold Extra Capital for ‘Unexpected Losses’
This story falls under two categories: “Why is this not bigger news?” and “Why do the people who know about it not seem to care?”
In yet another example of Americans and most in western society sticking their head in the sand to get away from the pack of lions surrounding us, the Fed is instructing the eight biggest United States banks to prepare for “unexpected losses” in the near future to the tune of $200 billion in additional capital. JPMorgan Chase, Citigroup and Bank of America are amongst the forewarned. Technically, the American population has been forewarned as well, giving the Fed license to do its worst.
The funny part is that only one of the banks, JPMorgan, didn’t already have the extra capital ready to go before the warning. These “capital surcharges” are based upon risk. The Fed isn’t hiding this fact, but you won’t hear about the risks to the people on mainstream media. Even if you’re one who doesn’t believe in a future economic collapse, you have to acknowledge that this will strain the system from a lending perspective, forcing banks to tighten their standards by decreasing the amount they’re willing to loan to individuals and businesses.
If this wasn’t alarming enough, the Fed extended their banking standards to a systematically important nonbank financial company: General Electric. They are divesting another $200 billion in GE Capital.
All of this is being displayed as a way to prevent another collapse similar to 2008. In other words, this is being sold to those watching as a safeguard for the people.
According to Financial Express:
In recent years, the Fed and other regulators have put into effect a series of rules for banks to increase their capital buffers, as required by the 2010 financial overhaul law. The new additional layer of requirements for the biggest banks also exceeds the levels mandated by international regulators.