Word: riskiest
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Like what? One approach is to lay on a heavy cost of being big. Too-big-to-fail banks should have a capital cost that will make it a disadvantage to compete in the riskiest parts of the financial-services market. I also like President Obama's recent proposal, the so-called Volcker Rule, which would limit proprietary trading and investing. Combining these two regulatory changes ought to encourage big banks to figure out new business strategies, and that would involve selling off some of their riskier businesses...
...Monday, Citigroup said it had worked out a deal to repay $20 billion in government bailout money and terminate a loss-sharing agreement the bank had with the government for Citi's riskiest assets. Citi CEO Vickram Pandit said the moves were signs that his company was returning to financial health. The deal would also remove much of the government's pay restrictions on the bank. "These actions move us closer to ending a very difficult period for our company," wrote Pandit in an internal memo to Citi employees. (See 25 people to blame for the financial crisis...
...improve Citi's balance sheet either. In fact, it will do the opposite. Bove estimates that TARP repayment will lower the company's Tier 1 capital ratio to just over 11%, from a recent 12.8%. What's more, with the elimination of the government guarantee of Citi's riskiest assets, which could expose the bank to as much as $250 billion in additional losses, the bank's Tier 1 ratio will sink further, to 10%, according to Hensler. (See 10 big recession surprises...
...number of other variables that could materially change the amount that the FHA will need to pay out in claims. For instance: how much money the agency can recoup from foreclosed properties, the growing social acceptability of borrowers' walking away from their houses and the chances that the riskiest loans in the market are finding their way to the FHA since it requires only a 3.5% down payment. Comparing FHA loans with a subset of those made by Fannie Mae (not a perfect analogy, considering that the FHA pretty much backs only 30-year fixed-rate loans), Pinto figures that...
...time they took their eyes off the road - to reach for the phone or to dial it - the risk rose, by as much as 6.7 times. One potential consequence: vaunted headsets and hands-free devices promoted for automobiles may not offer much safety, as they don't address the riskiest elements of cell-phone use. (See 50 essential travel tips...