Saturday, June 11, 2016

Banks Are Transferring Regulatory Risk to 3rd Parties & Debt Growth Rate Hits 10-Yr Low Due To Government Spending

The Office of Financial Research published a brief titled More Transparency Needed For Bank Capital Relief Trades.  The brief suggests that banks are meeting regulatory capital rules by transferring credit risk to third parties. The paper uses data collected from 18 banks that purchased $38 billion in credit protection. The authors also attempt to estimate the impact of these third party transactions on a banks’ risk-based capital ratios. While this may represent a hole in regulatory policy, its impact is negligible due to the level of capitalization/liquidity in the market.

Source: Federal Reserve, Z.1 Release
The Federal Reserve published a statistical release update for Z.1: Financial Accounts of the United States Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts. As shown to your right, it provides an update on household net worth and non-financial debt at the business, state, and federal level. On an annual basis, the statistic hasn't been lower than 3% for at least the past 10 years, however, Q1 of 2015 showed total growth in debt as 2.8% due primarily to a large drop in federal government spending, which is partially offset by the large increase in the growth of debt at the state and local government level.

If you like what you're reading, please join my mailing list to receive blog posts and updates as they occur. If you're an investor with all of your assets tied up in the stock market and cash, you might want to consider a few diversification strategies. Gold is the oldest asset in the world and it's inflation proof. Bitcoin is the gold standard for the cryptocurrency world, which is the fastest growing asset class in the world. Diversifying your portfolio into one or both of these assets can help to insure your portfolio against a stock market crash or inflation. Most importantly, it can help to safeguard the gains you've made over the last 10 years.

Please note that there are other companies that sell gold and Bitcoin on the market, and you should always do your research when making decisions about your portfolio. Just like your personal health, if you're planning on having major surgery, you need to get a second, and sometimes a third, opinion. You want to make sure your surgeon is good and has performed the procedure many, many times.  In the same way, you need to trust your broker and you need to make sure they are reputable. This is the process I used when looking for a broker to recommend.

Full disclosure: RegalAssets compensates me for everyone I send their way, but I would receive compensation from any company I chose to recommend. The only broker I'm recommending is Regal, primarily due to its innovative product offering in my favorite commodities - gold, precious metals and cryptocurrency like Bitcoin. They also have a distinguished track record for success (see below).

Next Steps: Use Regal as one of your options and compare against them. Your other brokers should be able to offer the same level of service and the same low rates. The kit is free and it will provide you with a basis for comparison. Don't wait, get started today. Fill out the form below to get your free investment kit.

If you're interested in learning more about gold investments, click here to receive a free gold investment kit from Regal Assets.

If you're interested in learning more about Bitcoin investments, click here to receive a free Bitcoin investment kit from Regal Wallet.

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