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Major U.S. banks masked risk levels: report(gaming the system)
Reuters ^ | 04/09/10

Posted on 04/09/2010 5:30:32 PM PDT by TigerLikesRooster

Major U.S. banks masked risk levels: report

8:36am EDT

(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 ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: debt; financialfirm; gaming

1 posted on 04/09/2010 5:30:32 PM PDT by TigerLikesRooster
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To: TigerLikesRooster; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; ...

P!


2 posted on 04/09/2010 5:31:02 PM PDT by TigerLikesRooster (The way to crush the bourgeois is to grind them between the millstones of taxation and inflation)
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To: TigerLikesRooster

You mean the banking system in this country isn’t on the level?


3 posted on 04/09/2010 5:37:54 PM PDT by ninonitti
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To: ninonitti

Not surprising, is it?


4 posted on 04/09/2010 5:39:33 PM PDT by TigerLikesRooster (The way to crush the bourgeois is to grind them between the millstones of taxation and inflation)
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To: TigerLikesRooster

No it’s not surprising, but it is unexpected.


5 posted on 04/09/2010 5:41:47 PM PDT by rsobin
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To: ninonitti

THEY LIED.

(why are we not surprised?)


6 posted on 04/09/2010 5:51:07 PM PDT by UCANSEE2 (The Last Boy Scout)
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To: TigerLikesRooster

Clearly we need less regulation.


7 posted on 04/09/2010 6:09:02 PM PDT by Wolfie
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To: TigerLikesRooster

Dollar-bots? Look out below! ;)

http://www.321gold.com/


8 posted on 04/09/2010 6:42:23 PM PDT by Diana in Wisconsin (Save the Earth. It's the only planet with Chocolate.)
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To: TigerLikesRooster

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!


9 posted on 04/09/2010 7:32:57 PM PDT by JSteff (It was ALL about SCOTUS. Most forget about that and HAVE DOOMED us for a generation or more.)
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To: TigerLikesRooster

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.


10 posted on 04/09/2010 7:42:31 PM PDT by 1010RD (First Do No Harm)
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