Bank Basel Stall Tactic Could Backfire on GOP: Street Whispers

Written by: Philip van Doorn 08/06/12 - 6:46 AM EDT

Tickers in this article: JPM C BAC WFC

According to preliminary second-quarter regulatory data provided by Thomson Reuters Bank Insight, 250 banks and thrifts had insufficient levels of capital to be considered well capitalized under the current rules, while 138 were undercapitalized as of June 30. The FDIC had 772 banks on its "problem list" at the end of the first quarter.

It's time for regulators, banks and the industry's friends in Congress to move "too big to fail" out of the national conversation. While it is true that even a well-capitalized bank can get wiped-out in a hurry if it runs into a serious liquidity shortage, there's no question that the banks were bailed out -- even those like Wells Fargo, that claimed in October 2008 that they didn't need a bailout -- by a temporary capital infusion provided by the government.

The industry just has to accept that the banks will be holding higher levels of capital going forward. They have already been living this new reality for years.