[Christian]

http://www.zerohedge.com/news/2015-1...teralize-loans

Thoughts?

[CreditGuy]

There is little, if any, overlap between the businesses that will be impacted by this alleged credit crunch and the target business for lenders on this forum.

Also, I use the word alleged because ZH seems to ignore that the Fed finalized guidance regarding increased risk weighted capital requirements mandated by Dodd-Frank for banks in July of this year and heading into the new year has continued to revise this guidance and create a more complete framework under which banks have to risk rate assets. Under these rules, JPM is about $12B short and other money center banks are collectively another $20B short. Markets being what they are, rather than simply sucking it up and reserving the billions more in capital under the new rules banks have taken a two track approach to closing the gap by 2019 when the capital requirements are fully enacted. The first is to shed assets and reduce balance sheet size, which has resulted in money centers shuttering some business units and winding down lending in other sectors. Given the reduction in riskier assets and smaller balance sheets, the denominator effect will inflate the % of collateralized loans as the remaining assets will account for a larger slice of a smaller pie. The second is to increase collateral requirements on those remaining riskier assets to enhance ratings, thus requiring less capital reserves.

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