Three Precursors to the ’08 Crisis are Repeating Now
DailyReckoning: The biggest banks are still as dangerous as they were before the last crisis, even as they push for less regulation.
The big six banks U.S. banks are JP Morgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley. Despite their belly-aching about heinous Dodd-Frank Act regulations cramping their betting style, they have all done damn good recently.
Since Trump was elected and started talking about deregulation, the big six bank stock values have collectively skyrocketed 33.5 percent (as of March 10th). Bank of America tops that rise with an eye-popping increase of 48.8 percent in three months. Goldman Sachs and Morgan Stanley shares shot up 36.6 percent.
Of course, most stocks have been moving up since the election. But keep in mind that the S&P 500 rose just 10.9 percent during that same period.
Beyond a few extra capital requirements (mostly in the form of a set of rules called Basel III coming from Europe), the need to establish a “living will” in case of another financial emergency, and some limitations on risky trading, not much has changed for these banks.
Since the 2008 financial crisis, the big six banks’ total assets have increased by 21 percent. The big four by 25 percent.
Yet, of the total Global Derivatives Notional amount of $544 trillion, the big six U.S. banks carry $168 trillion of it. Comparing that figure to their total assets, we get a leverage amount of 24 times. To put that in perspective, that’s only slightly less than the leverage their derivatives positions before the 2008 crisis.
The biggest banks are still the ones most at risk, and most threatening to anyone with money in the stock market. Cracks have started popping up that make it clear to us that the next financial crisis is just around the corner. more
Wells Fargo is the worst bank ever to exist in human history.
I wouldn’t be surprised if they allow the muzzies to do “Sharia banking.”
This reads like the daily articles from Zero Hedge… The world ends tomorrow. Be that as it may, banks are, by definition, Ponzi schemes.
The overwhelming factor for the 2008 crisis wasn’t really caused by “bank over leverage” but by fannie mae and Freddie mac and HUD loans that were guaranteeing loans by people with no credit score and no income based on race or poverty policy and they hid the massive scale by making the loan, then selling it with their guarantee attached and of course, banks and investors snapped every bogus loan up with that. The scenario in that article is different in that banks are for the most part, trying to make secured loans with a reasonable likelihood that they will pay out.
Student loans are no different, other than the fact you cannot foreclose on them.
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If they bail these damn banks out again then we’re going to end up with a Bernie Sanders type.
If you have any money in a bank that fails, you will LOSE ALL OF IT? Think I’m kidding? Research BAIL INS. A new change, part of Dodd Franks, puts depositors at the bottom of the list in bankruptcy! Think the FDIC will make things right? Think again. FDIC is only marginally capable of paying off depositors. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=bail+ins&*
When Chase took over Washington Mutual. Things went to hell. Severe customer feedback has caused some improvement there, but it varies from branch to branch. Caveate emptor.
Save your $$$ and join your local Credit Union – best way to tell the bankers to fuck off is don’t deposit with them.