Printer Friendly
The Free Library
22,728,960 articles and books

AN EARLY WARNING SYSTEM FOR BANKS

AN EARLY WARNING SYSTEM FOR BANKS



U.S. banks large and small are buckling buckling

Mode of failure under compression of a structural component that is thin (see shell structure) or much longer than wide (e.g., post, column, leg bone). Leonhard Euler first worked out in 1757 the theory of why such members buckle.
 under the pressure of the credit crisis. The Federal Deposit Insurance Corp. has seized seized (seised) n. 1) having ownership, commonly used in wills as "I give all the property of which I die seized as follows:...." 2) having taken possession of evidence for use in a criminal prosecution. 3) having taken property or a person by force. (See: seisin, seizure)  13 institutions this year, most recently Washington Mutual “WaMu” redirects here. For the Washington, DC radio station, see WAMU.

Washington Mutual (or WaMu; NYSE: WM) is the United States' largest savings and loan association.
 ). The regulator regulator,
n the mechanical part of a gas delivery system that controls gas pressure that allows a manageable flow of drug vapor to escape.


regulator

see reducing valve.
, which maintains a list of "problem" banks, doesn't disclose which others raise red flags. But one measure, the so-called Texas Ratio, may offer a clue.

Developed by RBC Capital Markets RBC Capital Markets is the corporate and investment banking division of Royal Bank of Canada ("RBC"). Broker dealers
Depending on the jurisdiction, the division uses different broker dealer subsidiaries of RBC:
  • Canada: RBC Dominion Securities Inc
 analyst Gerard Cassidy in the 1980s, the formula was first used to forecast which Texas banks could stumble during that decade's downturn, another one tied to real estate. The ratio compares a bank's troubled loans to its capital. It can be an early warning sign of stress. If the amount of bad loans equals or exceeds the amount of capital--a ratio of 100% or higher--it may indicate a bank won't have the money to cover losses. That doesn't mean disaster is inevitable; a bank can improve its fortunes, for example, by raising more capital. Here's a list from research firm Highline Financial of 10 banks with high Texas Ratios as of June 30.
Copyright 2008 BusinessWeek
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright (c) Mochila, Inc.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Author:Mara Der Hovanesian
Publication:BusinessWeek
Date:Oct 9, 2008
Words:181
Previous Article:A SECOND WIND FOR TAKE-TWO?
Next Article:OUTSOURCING SHOPS FEEL THE STREET'S PAIN



Related Articles
Early warning systems for financial crises; applications to East Asia.
World shares mixed amid US bailout impasse
German bank announces collapse of 35 billion euro rescue
THE POLITICS OF THE FINANCIAL CRISIS
PM accused of ignoring warnings
At last, Bank chief admits: it really is a recession
East Asia to create 80 bln dlr fund, US sees deeper woes
India central bank keeps rates on hold, stocks dive
India central bank keeps rates on hold, stocks dive
India central bank keeps rates on hold, stocks dive

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters