- Due to banking reforms, institutions with a higher risk rating must also hold a higher percentage of capital in reserve to make up for the increased risk.
- Based on a 7 point scoring framework, 33 banks make the cut for having the highest systematic risk.
- Of the 33 banks, 5 have the highest risk of contagion. These are Citigroup (NYSE: C), JPMorgan (NYSE: JPM), Morgan Stanley (NYSE: MS), Bank of America (NYSE: BAC), and Goldman Sachs (NYSE: GS).
- While these banks provide reduced risk to investors through an implicit government backing, the cost of this protection is a higher reserve requirement and greater regulatory scrutiny.
What Investing In Too Big To Fail Means For Banking Investors
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Posted by Celan Bryant
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