Skip to comments.Major U.S. banks masked risk levels: report(gaming the system)
Posted on 04/09/2010 5:30:32 PM PDT by TigerLikesRooster
Major U.S. banks masked risk levels: report
(Reuters) - Major U.S. banks temporarily lowered their debt levels just before reporting in the past five quarters, making it appear their balance sheets were less risky, the Wall Street Journal said, citing data from the Federal Reserve Bank of New York.
The paper said on Friday 18 banks, including Goldman Sachs Group , Morgan Stanley , J.P. Morgan Chase Bank of America and Citigroup , understated the debt levels used to fund securities trades by lowering them an average of 42 percent at the end of each period.
The banks had increased their debt in the middle of successive quarters, it said.
Citi, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley were not immediately available for comment when contacted by Reuters outside regular U.S. business hours.
Excessive leverage by the banks was one of the causes that led to the global financial crisis in 2008.
Due to the credit crisis, banks have become more sensitive about showing high levels of debt and risk, worried their stocks and credit ratings could be punished, the Journal said.
(Excerpt) Read more at reuters.com ...
You mean the banking system in this country isn’t on the level?
Not surprising, is it?
No it’s not surprising, but it is unexpected.
(why are we not surprised?)
Clearly we need less regulation.
Dollar-bots? Look out below! ;)
Should we have expected anything else? The master and holder of title is the current regime.
Also to note they (regime) stood to make out the best from good news from the major banks.
Now who would have thought it was more important to make the federal government look good than to uphold their responsibilities to the stockholders?
Oh silly me, those parties primarily are one in the same.
How did we get to this point. Banks and the government are now one and the same!
Let’s see, we create a “system” to root out risk and then it gets “gamed” because all humans suffer from greed.
How about we overlay a new system - caveat emptor.
It’s an oldie, but a goody.