by Simon Black
On Friday morning, a gentleman named Thomas Hoenig wrote some rather unflattering comments about the US banking system in a little known publication called the Wall Street Journal.
In his remarks, Hoenig stated that “while the largest U.S. banks have increased capital since the  crisis, their capital is still lower than the industry average and inadequate for bank resiliency.”
Think about what means. A bank’s “capital” is essentially its rainy day reserve fund.
If there’s a giant mess in the financial system and asset prices collapse (as they did in 2008), a bank with plentiful capital will be able to withstand the crisis.