Economist Declares “Mission Accomplished” on Repairing Bank Balance Sheets

Reader Richard Smith provided a sighting of bank boosterism, courtesy The Economist:

The happy secret of Western banking is that the system in aggregate now has lots of capital (see chart) relative to the net losses experienced over the crisis. The kind of erosion of capital forecast by the Federal Reserve’s stress tests last year, for example, has simply not materialised. That means the Basel club can legitimately argue that banks in aggregate do not need to raise much new capital.