September 2008 was an extraordinary month, even by the
standards of an extraordinary crisis. We witnessed the
failure of Lehman Brothers, the rescues of
AIG (NYSE: AIG),
Fannie Mae (NYSE: FNM), and Freddie Mac, and
the conversion of the remaining bulge bracket investment
banks into bank holding companies. As we mark the one-year
anniversary of one of the most tumultuous months in the
history of modern finance, it's worth pausing to ask: One
year on, what has changed, and what hasn't?
Banks are better capitalized
As the following table shows, the largest banks have
significantly improved their capital ratios (or reduced their
leverage, if you prefer). Those firms that were thought to be
at greatest risk, including
Citigroup (NYSE: C) and
Bank of America (NYSE: BAC), have
appropriately made the greatest strides:
Bank
Tier 1 Capital Ratio (End of Q2
2009)
Tier 1 Capital Ratio (End of Q2
2008)
Goldman Sachs (NYSE: GS)
16.10%
10.80%
Citigroup
12.70%
8.74%
Bank of America
11.90%
8.25%
Wells Fargo (NYSE: WFC)
9.80%
8.24%
JPMorgan Chase (NYSE: JPM)
9.70%
9.20% Continued... |