- “Put more money up or reduce position!” The plug is about to be pulled to detonate the entire global financial and currency system! These are preparations for the coming calamity!
- Margin Calls Coming On US Too-Big-To-Fail Banks!
by Tyler Durden, www.zerohedge.com
Authored by Steen Jakobsen via his TradingFloor.com blog,
This week’s biggest news is not the Nonfarm Payrolls, or the European Central Bank or even Portugal’s government falling. No – this week’s big deal is the openness with which the Federal Reserve is preparing a major margin call on the too-big-to-fail banks in the US.
This has been a long time coming since the introduction of the Dodd-Frank law back in 2010 but it is a game changer. Remember all macro paradigm shifts come from policy impulses, often mistakes.
Fed approves step one in a three step plan
Under the final rule, minimum requirements will increase for both the quantity and quality of capital held by banking organisations. Consistent with the international Basel framework, the rule includes a new minimum ratio of common equity tier 1 capital to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets that will apply to all supervised financial institutions. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets from four percent to six percent and includes a minimum leverage ratio of four percent for all banking organisations. In addition, for the largest, most internationally-active banking organisations, the final rule includes a new minimum supplementary leverage ratio that takes into account off-balance sheet exposures. (See the press release here)
I know you are thinking: Wow, this is the most interesting thing I have seen in years 🙂 but alas it is – because it is in fact a major margin call on the US holding banks.