FOMC doubles the cash reserve requirements for 8 largest u.s banks: “This rule is an important step… it will go a long way toward helping us weather financial storms in the years to come.”
When we first read this article today by the WSJ we thought: hey that’s great. Until we read one of the last lines which sounds uncomfortably prophetic “This rule is an important step… it will go a long way toward helping us weather financial storms in the years to come.”
That really has to make you wonder what exactly are they expecting in “years to come”? That would cause them to increase the financial reserves by double the amount of the rest of the international banking community.
Below are quotes from Fed Chair Janet Y.
“The final rule is an important part of the board’s package of enhanced prudential standards for the most systemic U.S. banking firms—a package that is designed to materially reduce the probability of failure of these firms and to materially reduce the damage that would be done to our financial system if one of these firms were to fail,” Fed Chairwoman Janet Yellen said.
You have to ask yourself: Why at a time when the Fed has been saying how wonderful the economy is growing, unemployment is shrinking that they would start talking about the potential failure of the Big Banks in the U.S?