Stocks Storm Back in the Green After Regulators Ease Volcker Rule

[rangerray]

"Stocks Storm Back in the Green After Regulators Ease Volcker Rule Ahead of Stress Test Results"


I'm reading an article on zerohedge.com, that I mysteriously cannot get to on my government computer, and it says that stocks are currently surging as of 10 AM EST when Bloomberg reported that the Office of the Comptroller of the Currency and the FDIC have approved changes to the Volcker Rule, further easing its provisions, and allowing banks to increase their dealings with certain funds by providing more clarity on what's allowed. The OCC also scrapped a requirement that lenders hold margin when trading derivatives with their affiliates, according to Bloomberg.

The Fed is expected to sign off on the proposals later today.

The above statements came from the article. I have no idea what it all means.

 

[Bullitt]

I have no idea what it all means.

Those stress tests were always a sham designed to build confidence in the system. I doubt they've factored in worst case scenarios of many loans that will never be paid. Some banks could cut their dividend in half and would still yield more than the S&P 500. Maybe investors see this is 'the banking system being secure'.

Everyone knows you need the banks to rally in a market uptrend as the lending system lubricates all the cogs.

From WSJ below. Four quarters is a year. They are averaging out the financial hit from history instead of projecting it based on trends.

Banks won’t be able to make payouts that are greater than their average quarterly profit from the four most recent quarters.

The Fed also barred them from buying back shares in the third quarter. Most of the largest banks had previously agreed to halt buybacks during the second quarter. Buybacks are the main way U.S. banks return capital to shareholders.

https://www.wsj.com/articles/fed-st...-withstand-the-coronavirus-crisis-11593117020