Banking assets equaling the U.S. GDP, scary thought. According to Bloomberg, 50% of these assets are off balance-sheet and are compromised of derivatives (bets) and other risky loans. With banking officials not being accountable to the same laws as the U.S. citizenry and this amount of ownership in Dollar assets, will not end well.
The math is starting to paint a bleak picture and we are seeing precedent that is backing up much of the dissenters message on these subjects. Too Big to Fail, Too Big to Jail, what does that mean? It sounds like we have a financial super-structure that is considered untouchable by the people who we elect and or expect to be upholding the rule of law in the name of Justice.
Think about it.
Bloomberg - That label, like a similar one on automobile side-view mirrors, might be required of the four largest U.S. lenders if Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., has his way. Applying stricter accounting standards for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are — or about the size of the U.S. economy — according to data compiled by Bloomberg.
This is good news. With the banking industry making over $37 billion in fees stemming from these practices and not normal banking activities like lending and making interest on those loans. In my opinion this is a form of financial parasitism because instead of practicing normal banking, our industry has instead turned to making fees from normal banking operations they are targeting customers that have the least amount of excessive income and that shows in the facts a large portion of these fees are from overdraft charges and if you have excessive income to put into your account then you would not overdraft regularly.
It is no surprise that in the world’s largest economy, you would have the highest pay scale. I do disagree with the comment that it is impossible to recruit the right talent without these huge paychecks, but at the end of the day that is between the board of directors, shareholders and CEO’s.
The real problem is our myopic focus on short-term profits over long-term viability. That has steered our corporations and specifically our banks to take excessive risk to make gain to satisfy their quarterly results. This is what keeps creating crisis after crisis and is the source of our “systematic risk”.
Reuters, New York - You wouldn’t know it by his pay stubs, but Jiang Jianqing heads the world’s largest bank. Jiang, chairman of Industrial and Commercial Bank of China, made just $234,700 in 2008. That’s less than 2 percent of the $19.6 million awarded to Jamie Dimon, chief executive of the world’s fourth-largest bank, JPMorgan Chase & Co.
Well here is what we get, so enjoy. Not only have we as a country (I disagree) agreed to bailout financial institutions that made bad decisions in a free market and if we could audit them, we would most likely see that they are insolvent based on the assets/liabilities. This is just icing on the cake, we are now going to give them our taxpayer money and they are going to payout $86.5 billion dollars over the next 3 years.
Why is it they don’t have the money to lend but do have the money to pay their shareholders? We have been hoodwinked in my opinion so either everyone who reads this, calls their representatives and make a real fuss or let this travesty continue.
U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.
I think we should really think about what implications this can pose for the U.S. citizen and our credit on the world stage if we open ourselves to this exposure of potential risk. When you talk about covering the bank debts then I would assume you are including all of the DERIVATIVES they have exposure too that now number over $500 TRILLION dollars according to the Bank of International Settlements (BIS).
U.S. financial institutions were the biggest players in this market. What do you think is so large that is has caused the global financial system to breakdown and would stop banks from even lending to each other? If they are proposing to “make good” on these then where do you think the U.S. dollar is headed if we have to issue trillions of dollars to keep these failed bank a float? The amount of price inflation we will see if this type of money goes into the system will be unprecedented, period. Please help us.
The U.S. government is weighing guaranteeing billions of dollars in bank debt and temporarily insuring al U.S. bank deposits, in a bid to unfreeze bank lending and staunch massive losses in equity markets, The Wall Street Journal reported on Friday.
The New York Times reported that U.S. and British officials were converging on a similar blueprint to stem financial chaos involving injections of government money into banks in return for ownership stakes and guarantees of repayment for various types of loans.