Fed pulling back is no big deal

It's September, and what we're most worried about is whether the US Federal Reserve will ``taper'' its bond- buying program or not.迷你倉新蒲崗 Before tackling this question, let's discuss the latest Fed report. It shows that 18 large American banks with asset size exceeding US$50 billion (HK$390 billion) failed to carry out good risk management. But fortunately, at the end of last year, the common capital adequacy was 11.3 percent - far above the 5.6 percent on average at the end of 2008. The Fed report is very clear, in that the reform of the US banking industry over the past five years was excellent. However, the Fed still doesn't think these banks did a good job of risk management, so it will continue to strengthen its supervision. From a pessimistic point of view, the US banking industry still has to face the consequences brought on by stronger regulatory oversight. Such business is less free than in 2008, so including turnover of US st迷你倉出租cks, it's hard to regain the peak level of 2007, which all financial practitioners should be aware of. Therefore, the analysis of momentum of the market and calculation of operations both have to be adjusted accordingly. But from an optimistic point of view, because these 18 banks last year saw the common capital adequacy ratio jumping, even if the Fed really pulls back, it won't seriously affect the market since many banks no longer rely on Fed assistance. In addition, the size of the Fed bond buying remains substantial. It is still buying US$85 billion monthly and US$1.02 trillion of debt annually. Once a pullback occurs, the scale may be reduced to US$70 billion per month at the outset, but this would mean the Fed will still be spending US$840 billion a year. In fact, the amount will remain very large, so in that case, who needs to worry about a pullback? Andrew Wong Wai-hong is an independent commentator on financial markets. 迷你倉