Reform or Not, Bank Creditors Are Scared

NEW YORK (TheStreet) -- It's hard to find anyone really fired up about the Dodd-Frank Wall Street Reform and Consumer Protection Act, but at least one of the legislation's goals appears to be being met: Bank creditors are scared. Scaring creditors of big, systemically important banks like Citigroup C, Wells Fargo WFC, JPMorgan Chase JPM, Bank of America BAC, Goldman Sachs GS and Morgan Stanley MS is a worthy goal, because it makes it more expensive for those banks to fund themselves. Higher funding costs will make it harder for banks to become bigger, more powerful, and more risky, and for their failure to take the rest of the economy down with them. Though low Treasury rates and growing deposits improve the funding picture for the big banks, those factors are offset by fears over banks' creditworthiness, reflected in the high cost of credit protection against a default by the big banks. To read the rest of this article, click here.