POINT: Capital should be used as a leading indicator of a bank’s health.
COUNTERPOINT: Bank capital is a lagging indicator.
As important, or maybe even more important, is “Clarity in Capital Requirements” Examiners and the Agencies should have very clear effective minimum capital standards. Speculating about what might be the effective standard at an exam is counter-productive to the social desire of having more lending occur in the system, and also discourages the commitment of additional capital to the banking system.
Regulatory ambiguity and whisper numbers do not help to grow our economy…
via www.forbes.com
