You need to upgrade your Flash Player
-$0.13 (-17.33%)
07:44AM (15 mins delay)
May 02, 2009 - 11:25 PM EDT
Victor Cook submits: The Federal Reserve will not be releasing the results of its stress tests of the nation's biggest 19 banks until Thursday, and undoubtedly there is some element of folly in daring to beat the Fed to the punch. After all, according to The New York Times, the tests have been in the works for two months and have involved more than 150 regulators who, in addition to poring through voluminous bank data, have had the benefit of the banks' analyses of how various hypothetical situations will affect their loss rates.
Still, one can't help but wonder if there are other tools at hand that can get the job done properly without taking so long. In fact, I introduced such a tool in my last post – a bank’s asset quality ((AQ)) index. It enlists an engine of analysis that dwarfs even the Fed's 150 regulators -- namely the equity and debt markets. Quite simply, it compares a bank’s share of market capitalization to its share of revenues -- the interest it earns on producing assets plus fees for banking services. This provides a quick insight into how the share of value investors assign to these institutions compares with the share of revenues they earn on assets, which constitutes a direct measure of their investment quality.
Source: Seeking Alpha (May 02, 2009 - 11:25 PM EDT)
© 2009 UpDown. All Rights Reserved.
Make a suggestion for this page
Data powered by QuoteMedia (Terms of Use). Data delayed 15 minutes unless otherwise indicated.
