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Chart of the Week
First Line of Defense
Recent stress in the financial sector has raised concerns regarding the monetary health of banks. Relative to the Global Financial Crisis, many banks today hold more cash, fewer risky real estate loans, and have lower loan to deposit ratios. In addition, Tier 1 capital ratios, representing the first line of capital available to absorb losses, are at multidecade highs, providing capital buffers for these banks.
Source: Federal Reserve, GS Investment Strategy Group, and GS Asset Management.