Here's a very big bank that had assets of $1.03 trillion and capital of only $9.6 billion, for leverage of 107 to 1, on Jan. 28, 2009. To put it another way, its capital ratio was less than 1% of its assets. Is this undercapitalized?

At the end of 2007 it had assets of $347 billion and capital of $9.2 billion, for leverage of 37 to 1, or a capital ratio of 2.7%. Assets have tripled, while capital is virtually unchanged — an already very low capital ratio has become a lot lower.

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