Whether the financial reform bill gets done before July 4th does not change its reality: financial reform will cost banks money.
I’ve been searching for a price tag for banks from financial reform and I’ve found bits and pieces of cost estimates. Yes, we know the too-big-to-fail fund will cost $19 billion, but what about financial reform in its entirety? How much will that cost?
Wait no longer. Citigroup has actually come up with a number, and it was buried in a Wall Street Journal story this morning:
Inside most banks, the mood already has shifted to assessing how much revenue and earnings are likely to evaporate if the bill becomes law—and how to make up for the forgone money. Keith Horowitz, an analyst at Citigroup Inc., estimated the legislation would reduce annual earnings per share for big U.S. banks by 6%, down from his previous estimate of 11%.“The rules did not include some of the more worrisome potential outcomes that could severely impact bank profitability or force a new wave of capital raises,” Mr. Horowitz wrote in a note to bank-stock investors.
While 6% is nothing to sneeze at, it is interesting to note that earnings at US banks have come way down. For example, the nearly 8,000 FDIC-insured banks in the US turned in slightly less than $17 billion of net operating income in the first quarter. That compares to more than $35 billion of net operating income for the same quarter in 2007.
the only way this draft were to solve problms is to cease/desist all OTC derivatives trading of instruments that plumed after enron phil’s loophole. also prohibit all synthetic structured finance. they’ve handled all of that very badly, despite their maggot screaming, there’s been nothing about that business nor the draft that have adequately addresssed that. also if too big to fail needs to get repealed and the repeal of glass steagall needs to be a genie put back in the bottle, put back the g20 agreemetns also, force european banks operating in the US to capitalize, and repeal all ‘free’ trade agreemetns as these have been a way used to collapse the economy and give banks an excuse to contribute to it by not lending and banks an excuse to have eroded the economy badly enough to interfere with a decent commercial and industrial market to lend into.
who needs more junk and flawed product from china, or mexico? ask your self that. and are you the better for all of that bogus product?