As described in the text, there is a shift under way in the regulation
of financial institutions toward more market-based solutions to regulatory
issues. One of the most important aspects of this shift has been an increased
emphasis on capital adequacy standards, with improved methods of assessing
the overall level of risk inherent in a financial institution's asset holdings.
The purpose of this exercise is to examine how well capitalized the largest
commercial banks and savings and loan associations are relative to the tier-one
and tier-two capital requirements described in this chapter.
a. Visit the S&P Market Insight database at mhhe.com/edumarketinsight
and find the annual balance sheets for three of the nation's largest commercial
banks and two of the nation's largest savings and loans. (You may use any
of the banks and savings and loans mentioned in this chapter if you wish.)
Look under "Excel Analytics."
b. For each of these financial institutions, list the "Risk-Adjusted Capital
Ratio: Tier I" and "Risk-Adjusted Capital Ratio: Tier II" for each of the
years that data are available.
c. How well were these firms meeting the capital adequacy standards in the
most recent year for which data are available?
d. Which of these firms have become better capitalized and which have seen
their capital adequacy position deteriorate recently? What might have caused
this change?
