Wednesday, July 5, 2017

The 2017 Corruption Return Plan. Bought With Both Hands

Banks are bid right now because the Fed just approved a much bigger than expected capital return plan based on the most recent bank stress tests. Also today the Fed admitted that their loose money policies had created risk of greater financial instability.

Two things that go great together - high risk and reduced capital buffer:

"Such lavish payouts are exactly what investors had been hoping banks would deliver under a Trump presidency"

"Even Wells Fargo which has been embroiled in a huge scandal over the creation of as many as two million unauthorized bank and credit card accounts, passed the stress test on Wednesday without any objections from the Fed"

"President Trump wants to reduce the influence of the Federal Reserve"

In other words, we've seen this "capital return" plan before, and it doesn't return as much capital as expected:

Also today in Trumpfuckistan:

"It doesn't really do a consumer well to be extended credit that they can't afford, they can't reasonably service"

Why not, we've tried it before and it worked out fine after the bailout...

"That means consumers could be saddled with even more debt, heightening the risk of default, but the argument for it appears to be that risk in the market now is unnecessarily low"

"We have unnecessarily low risk, and we need to raise it until we have necessarily excessive risk again"