Question now is – Are we letting some weaker banks live longer and risk higher FDIC losses? And if so, just when do we close them to stem FDIC losses?
Office of the Controller of the Currency Main job is to regulate national banks.
They defined Tier 1 capital = Higher quality capital held by the bank to hedge against losses.
Minimum Tier 1 capital by national banks is supposed to be around 3% of total assets, or a total risk based capital ratio 9i.e., overall capital a bank holds to support operations) < 6%. Apparently, current laws don't require regulators to start bank closing procedures unless the ratios fall very low. Source: WSJ, 9-30-2013, C1