GO
Loading...

Enter multiple symbols separated by commas

Preserving Bank Capital Must Be Focus: McTeer

The potential changes to the mark-to-market accounting rules could hurt the government’s plans to entice private investors into buying toxic assets, but as long as the problems with bank capital are being fixed, it doesn’t matter, Robert McTeer, former president of Dallas Federal Reserve, told CNBC.

“The objective is to stop the destruction of bank capital, it's not to get toxic assets off banks' balance sheets. That's a means to an ends,” McTeer said, adding that there could be numerous ways to achieve the result.

If the toxic assets remain within the banks, without causing problems to capital, then the problem would be fixed, according to McTeer.

But the incentive for private investors to buy into toxic assets, which a recent government initiative have been trying to encourage, could be diminished by the new rules, he said.

“If they make it easier for the banks to hold on to some of their illiquid mortgage-backed securities, then there’ll be less incentive to use this program,” McTeer said.

Plans to make the new accounting rules only apply to banks with problems in the futures are flawed, McTeer adde. He likened it to having a cure for cancer where only new patients could get the cure.

Banks

  • Jamie Dimon

    JPMorgan Chase's officials haven't done enough to show what the company is doing right, leading to shareholders disapproval.

  • Attorney General Loretta Lynch enters a packed news conference at the U.S. Attorneys Office of the Eastern District of New York following the early morning arrest of world soccer figures, including officials of FIFA, for racketeering, bribery, money laundering and fraud on May 27, 2015 in New York City.

    U.S. legal authorities said they have the jurisdiction to go after some FIFA officials for corruption charges.

  • Jeffrey Lacker, president of the Federal Reserve Bank of Richmond.

    Policymakers must ensure that creditors must be willing to let firms fail in order to restore discipline, a top Fed official said.