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Greek Turmoil, G-20 Decisions Target U.S. Lenders

Political trouble in Greece sent stocks and shares for major mortgage lenders tumbling Friday, even as the world's 20 wealthiest nations placed eight U.S. banks on a list that may require systemically risky institutions to shore up their capital reserves.


The decision revealed the degree to which events overseas continue to shake U.S. mortgage lenders in an increasingly interdependent global economy, where international players fear the potential for a double-dip recession.

After reversing the call for a popular referendum, Greek Prime Minister George Papandreou survived a no-confidence vote Friday only to resign Sunday, according to CNN, with the caveat that opposition leaders would respect the country's hard-won bailout package worth trillions of euros.

Fear for the Greek bailout ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and the safety of the global economy itself ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô created an investor selloff Friday that forced the Dow Jones Industrial Average to end the day 61.23 points below yesterday and slash stocks and shares for U.S. lenders.

Among the big four, ""Bank of America"":https://www.bankofamerica.com/ led the way down with a 6.08-percent decline for stocks, tying off shares at $6.49 each by end of day. Fear for Greece hacked away at ""Wells Fargo's"":https://www.wellsfargo.com/ stocks by 1.59 percent, wrapping up shares


at $25.40.

Stocks for ""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm fell by 1.19 percent to close shares at $33.97, with ""Citigroup"":http://www.citigroup.com/citi/homepage/ following at a 1.43-percent clip downward to end the day with $30.34 per share.

As European Union member states and markets waited on Greek politics, the G-20 meeting drew to an end with a decisive call to prevent so-called global systemically important financial institutions (G-SIFIs) from collapsing in the wake of another financial crisis.

The abovementioned U.S. lenders saw their names on a list with 21 other G-SIFIs, along with The ""Bank of New York Mellon"":http://www.bnymellon.com/, ""Goldman Sachs"":http://www2.goldmansachs.com/, ""Morgan Stanley"":http://www.morganstanley.com/, and ""State Street"":http://www.statestreet.com/wps/portal/internet/corporate/home/!ut/p/c4/04_SB8K8xLLM9MSSzPy8xBz9CP0os3i_0CADCydDRwP_IGdnA08Tc38fINvYwNVQPxykA1lFSJArUIWxoauBgZNRoKkJfvkAc4i8AQ7gaKDv55Gfm6pfkJ0dZOGoqAgAT3My7A!!/dl3/d3/L2dBISEvZ0FBIS9nQSEh/.

The conference of nations ""listed"":http://www.financialstabilityboard.org/publications/r_111104bb.pdf four next moves for international authorities, including the development of so-called ""resolution regimes,"" institutional wellness assessments, greater supervisory mandates, and ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô maybe most importantly ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô requirements that G-SIFIs retain on their ledgers some 1 to 2.5 percent of risk-weighted assets in order to fend off collapse.

In a statement, ""Fitch Ratings"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp described U.S. banks as able to ""successfully comply"" with the new measures, reflective of the earlier Basel standards, ahead of the implementation dates.

""Fitch feels the majority of US banks appearing on the list have the option of covering additional reserves with normal earnings retention,"" it said. ""In addition, Fitch thinks banks subject to the increased buffers could also dispose of assets and investments that receive more onerous capital charges in order to address their buffer.""

It singled out Bank of America as one institution that may see more ""hardship"" in lieu of the surcharges.

A confidence vote by the Greek parliament for Papandreou is reportedly expected by midnight Friday, while the G-20 summit called for all named banks to comply with the measures by 2019.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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