Dick Bove: The World's Central Bankers Just Voted To Induce A Global Recession!

Dick Bove

From Dick Bove’s latest, a dire warning about new capital requieemtns:

Central Bankers Vote for Global Recession– On Saturday, the committee of central bankers that was established to determine what the penalty should be for being a global systemically important financial
institution decided to demand that these large institutions should have 9.5% (7% plus 2.5% penalty) Tier 1 Common Equity Ratios. If the bank becomes even more successful the 2.5% penalty should be raised to 3.5%. This vote comes at a time when European banks should be writing down their holdings of sovereign debt not just the debt of Greece which has effectively defaulted. The vote ignores the total failure of the QE2 thrust in the United States to stimulate this country’s economy. The vote further ignores the fact that the global banking industry will be forced to raise hundreds of billions of dollars of new equity or dramatically shrink its balance sheet at a time when the global governments want this industry to grow its loan portfolios to stimulate economic activity. The Basel voters see no connection between the two

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