"Tier 1 capital ratio was set at 6% of a bank's risk-weighted assets."
And interestingly enough, the Treasuries that now constitute a substantial portion of certain banks' underwater assets have a risk weighting of 0, meaning they aren't counted in the Tier 1 capital ratio at all.
"Your cash is an asset to you and a liability to your bank."
Waxing pedantic here: Although I have substantial bank deposits, I don't consider bank deposits to be cash. The cash in my pocket and in my 'mattress' isn't a liability to my bank. Yes, I'm an old fart who actually still carries cash on my person at all times and has some additional physical cash stockpiled.
Another excellent column, Mr. Kust! You’ve answered the questions simmering on the back burner of my brain. You have a real talent for explaining things to those of us who are not financial professionals- thank you!
"Tier 1 capital ratio was set at 6% of a bank's risk-weighted assets."
And interestingly enough, the Treasuries that now constitute a substantial portion of certain banks' underwater assets have a risk weighting of 0, meaning they aren't counted in the Tier 1 capital ratio at all.
"Your cash is an asset to you and a liability to your bank."
Waxing pedantic here: Although I have substantial bank deposits, I don't consider bank deposits to be cash. The cash in my pocket and in my 'mattress' isn't a liability to my bank. Yes, I'm an old fart who actually still carries cash on my person at all times and has some additional physical cash stockpiled.
Another excellent column, Mr. Kust! You’ve answered the questions simmering on the back burner of my brain. You have a real talent for explaining things to those of us who are not financial professionals- thank you!