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During his second year as chief, Mr. Moynihan sold off noncore assets and built up capital levels.
During his second year leading the bank, Mr. Moynihan aggressively sold off noncore assets and built up capital levels.
In the good years, banks had become highly leveraged – they had increased their lending far more rapidly than they had built up capital to guard against losses.
Since then, private insurers have built up capital reserves that were not significantly checked even by last year's Hurricane Hermine.
And they built up capital for the purpose of protecting those loans in the event of a downturn.
So if they've built up capital losses, you may want to put taxable bonds, real estate investment trusts or other highly taxed ordinary income investments in their accounts.
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Curtailing dividend payments would have been the fastest, cheapest way for banks to build up capital.
They can prod banks with taxpayer guarantees to shrink their risks and to build up capital buffers to absorb losses.
It is true that this might cut into bank profits, especially during a transitional period, as you build up capital.
The bank says it would have plenty of time to build up capital through earnings or that it could take steps to free up capital through asset sales.
A wise regulatory regime would require institutions to build up capital in good years so that they can husband their resources in lean years.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com