Nearly all institutions indicated that in their own internal reviews, they focused largely on factors such as their targeted external credit rating and their regulatory risk-based capital ratios relative to those of their primary competitors. If these figures were in line, they generally viewed their capital as adequate. Although the targeted and actual ratios were significantly above regulatory minimums, these responses were disappointing, indeed.
1  2  Parenthetically, a century ago, banks were rarely subsidized and, hence, were required by the market to hold far more capital than they do now. In today’s environment, bank supervision and deposit insurance have displaced the need for high capital-asset ratios in industrial countries.