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Monday, September 13, 2010

Banks Forced to Double Reserves


New financial guidelines were set by global officials meeting in Switzerland on Sunday. The agreement referred to as the Basel III agreement, requires the Banks to increase their capital cushion to 4.5% of assets. The current requirement is 2%.Banks will also be required to hold an additional 2.5 % of assets to protect against periods of future stress.

The increase will be done gradually with implementation of the new standards to commence Jan. 1,2013 and spread out over the next two years.

Bank watchdogs such as the Fed and FDIC will monitor and enforce the regulations once they have been adopted by each country.

The purpose of these new regulations is to avoid another financial crisis similar to that of 2008, which nearly precipitated a world wide depression.

Members of the Basel Committee on Banking Supervision (which is made up of delegates from 27 countries) are convinced that the new guidelines will help to stabilize the banking industry.

It appears investors agree as banking shares have shown a rally as a result of this news. Whether or not that rally can be sustained is anyone's guess, only the future will tell the true story. However, The Hoss feels this move is a step in the right direction.

Stay on Track,Money Magazine Hoss

Next Hoss Cents Free Financial Money Magazine Post: Sept. 19,2010

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Sunday, September 5, 2010

Obama to Stimulate Economy

Official presidential portrait of Barack Obama...Image via WikipediaThe United States job data report showed that private sector employers increased new jobs by 67000 during the past month. In addition the figures for July and August were revised in an upwards direction, however the overall unemployment continues to rise and now sits at 9.6 percent.

Next week President Barack Obama will announce his administrations plans to stimulate the economy. He made the announcement in the White House Rose Garden and stated the report was “positive news, and it reflects the steps we've already taken to break the back of this recession. But it's not nearly good enough.”

“That's why we need to take further steps to create jobs and keep the economy growing including extending tax cuts for the middle class and investing in the areas of our economy where the potential for job growth is greatest,”

President Obama continues his quest to have the Senate support and pass his bill that contains tax breaks for small business in the amount of about twelve billion dollars and the creation of a thirty billion dollar fund to finance lending. The Republicans as is the nature (the party of no) is opposed to the bill on the grounds it is similar to the bailout of the financial industry.
Lawmakers are not scheduled to return to work until mid September therefore do not expect much to happen before the November elections.

Stay on Track,Money Magazine Hoss

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