Six months ago, Tim Geithner, US Treasury secretary, promised “new rules of the game” for the financial system. Banks are still waiting, and the games continue.
Take Goldman Sachs. Having repaid government support, its share price is back to three-quarters of its record high. The bank produced a record second quarter, as it cleaned up in fixed income and equity trading. It has also raised $6bn in equity and now boasts an eye-catching tier one capital ratio of more than 16 per cent.
No wonder, though barely a year after the advent of the crisis, that some investors are muttering about Goldman having excess capital. As a bank holding company, Goldman would need Federal Reserve permission for a hand-out. But even for the “chosen banks”, such as Goldman, the idea of moving ahead of as-yet-unwritten rules seems crazy. Just last week, the Group of 20 urged banks to build capital, promising internationally agreed rules to boost the quantity and quality of the buffer against losses.
