CHICAGO, Sept. 11, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Goldman Sachs Group, Inc. (NYSE:GS-Free Report), Citigroup Inc. (NYSE:C-Free Report), Bank of America Corp. (NYSE:BAC-Free Report), Wells Fargo & Company (NYSE:WFC-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
New Regulations U.S. Banks Can't Escape
Adding to the already intense regulations in the banking sector, the Federal Reserve intends to impose new stricter norms on the U.S. banking giants. On Tuesday, Fed Governor Daniel K. Tarullo released a statement, giving an update on the Fed's advancement towards the Dodd-Frank Act that started over four years back and outlined some important forthcoming "regulatory and supervisory priorities" to act upon the concerns arising from the "too big to fail" banks and systemic risk. The testimony was prepared for a hearing before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate.
Of the 29 global systemically important banks ('GSIBs') identified by the Financial Stability Board ('FSB'), there are 8 U.S. banks – The Goldman Sachs Group, Inc. (NYSE:GS-Free Report), Citigroup Inc. (NYSE:C-Free Report), Bank of America Corp. (NYSE:BAC-Free Report), Wells Fargo & Company (NYSE:WFC-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report), and others. An updated list will release on Nov 2014.
Higher Capital Surcharges
Among the imminent rules, Tarullo outlined the imposition of common equity risk-based capital surcharges on U.S.-based GSIBs. This considers the fact that as a firm becomes more systemically important, it calls for tougher capital requirements.
The objective of the reform is to make banks capable of protecting themselves from severe scenarios. The reform might also induce large banks to trim down their 'systemic footprint' and risks. Notably, the Fed's capital surcharges for the U.S. GSIBs will be stricter than the international standards set by the Basel Committee on Banking Supervision ('BCBS').
Short-term Wholesale Funding
Furthermore, the Fed is concerned of the banks reliance on short-term wholesale funding as it believes that such funding poses a risk to the firm's solvency and affects the broader financial system as well.
In the normal period, short-term wholesale funding aids investors in making safe and liquid investments, decreases borrowers' funding costs and helps in overall functioning of the markets. However, such funding has an adverse impact during a stressed period. The testimony stated "the runs by providers of short-term wholesale funding and associated asset liquidations can result in large fire sale externalities and otherwise undermine the financial stability. A dynamic of this type engulfed the financial system in 2008."
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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