93 words, most of them wrong

In the WSJ, The 93 Words That Could Unlock $200 Billion in Bank Capital. This could be a great MBA final exam. Spot the errors: 
"Tucked inside a nearly 600-page legislative proposal to overhaul U.S. financial regulations are 93 words that could provide a windfall for bank investors seeking heftier dividends and share buybacks."
"Bank analysts at Barclays BCS -6.08% PLC estimate $236 billion in capital is tied up in operational risk at the four biggest U.S. banks alone"
"Bankers ... want to free up capital that could be returned to shareholders or used for more lending."
"Mr. Dimon added that U.S. banks now hold about $200 billion in capital against operational risk."
(I made it easier with italics, all mine.)

Windfall? When a company pays out dividends, the stock price goes down exactly by the amount of the dividend payment.

Capital is not tied up. Capital is a source of funds, not a use of funds. Capital is equity investment in the bank -- people give the bank money, in return for a stream of dividends.  Capital is not reserves -- cash lying around the vault.

Capital is already used for lending!  Banks get money from equity holders, bond holders, and deposits, and lend it out. Capital requirements are about the ratio of sources of money. (At best, lower capital requirements would allow banks to borrow more money without issuing more equity to lend. If they wanted to.) Capital is not reserves.

No bank "holds" capital, and I hope Mr. Dimon didn't actually say that, as much as he would like lower capital requirements. Capital is not "held" like reserves.

This article does reflect nicely the total level of confusion in the debate about banking regulations. Colleagues contemplating clever complex schemes, take note.

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