All-Clear for Big Banks Raises Fears of a Return to Risk<br />In a statement on Wednesday, the chief executive of Citigroup, Michael Corbat,<br />said, “Today marks a significant milestone for Citi and our shareholders.”<br />The Fed’s assessment, he said, demonstrated that “Citi has the ability to withstand a severe economic scenario<br />and remain well capitalized, while also substantially increasing our level of capital return.”<br />Although President Trump has promised to roll back many of the rules imposed after the financial crisis while appointing regulators with a much lighter touch, many bank analysts say memories of 2008 and the penalties<br />that followed will also inhibit risk-taking in the future.<br />And as was the case following the crash of 1929, “the legislative and regulatory response was quite harsh.”<br />The 2008 crisis “forced the U. S. banking system to recognize its losses and recapitalize itself quickly,” Mr. Moszkowski said.<br />“Changing customer behavior, like use of mobile banking, has also enabled them to cut back on branches and staff.”<br />While bankers themselves might be more cautious about lending or blurring the distinction between traditional banking<br />and Wall Street-style trading, one element of the go-go years has made a comeback recently: big pay packages for top executives.<br />He noted that with the 10 largest American banks holding 80 percent of all banking assets, “this<br />concentrated financial power residing at the top banks should be carefully monitored.”<br />“Without regulators and cops in the corner, you will have incentives for banks to take excessive risks,” Mr. Williams added.
