The government's stress test results are now old news; Morgan Stanley
Sandler O'Neill, a boutique investment firm focused on the financial services industry, applied the government's stress test methodology to the entire banking industry. They found that 38% of the 200 firms that sit just below the "big 19" are undercapitalized with an aggregate capital shortfall of $16.2 billion. The shortfall for all banks adds up to $24 billion.
Overbanked and undercapitalized
On the bright side, that amount is less than Bank of America
That's no bad thing: The U.S. banking system may be too concentrated at the very top, but with around 8,000 banks, it's clearly too fragmented below the "too big to fail" threshold.
Investors: focus on quality
Last September, I wrote: "I think we could see a large wave of bank failures, possibly numbering in the hundreds. Not megabanks like Citigroup