What Huge Risks Are Big Banks Hiding?

"The financial crisis had many causes—too much borrowing, foolish investments, misguided regulation—but at its core, the panic resulted from a lack of transparency. The reason no one wanted to lend to or trade with the banks during the fall of 2008, when Lehman Brothers collapsed, was that no one could understand the banks' risks. It was impossible to tell, from looking at a particular bank's disclosures, whether it might suddenly implode."*

Almost 80% of investors don't trust the big banks. Former high-ranking bank officials don't trust them either. What's hiding inside America's banks, and how much are they really worth? Cenk Uygur breaks down the disturbing details.
*Read more from Frank Partnoy and Jesse Eisinger/ The Atlantic:

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[jobulls]

My father once said that greed will be our downfall.... I wish he wasn't right all the time.

[romanmir]

It wasn't "derivatives" that blew up the economy. It was free money from the Fed that created that market and it was the free "insurance" from the government that PROMISED to pay for any losses in the derivative market (that's what F&F and FHA are really for).

Derivatives are just insurance, but the GOV'T ASSUMED ALL RESPONSIBILITY for insurance!

The gov't gave a green light to do any type of insurance trading based on no fundamental principles and promised to pay back all the losses.

[MrTwoCrows]

Somebody would scream how that would be "Socialist, Communist, Cictatorial, etc"
Things can NOT make SENSE in DC.

[jizzyb]

It's better than everyone else in the media who won't even bring it up.

[Strikernofear]

No it's not and should not be. If it was, it wouldn't be call JPMorgan. JPMorgan is a Banking and Financial service industry. The only thing their know to do are asset management, consumer banking, corporate banking, credit cards, investment banking, mortgage loans, private banking and wealth management. Anything beyond those demands a serious investigation.

[Cyrano]

Which risks?

Well, the public debts of the leading western nations are about 40, 000, 000, 000, 000 $.

But no one is hiding, just everyone is ignoring. It's a HUGE bubble.

[judoyodan]

A "crashed" economy isn't entirely a bad thing. With our monetary system, it has to happen once in awhile to clear the slate.

[rsll]

Finally someone who agrees with me on this point! I am okay with investment banks staying privatized so long as they only gamble with the money that private investors give to them. I'm perfectly okay with capitalism that is regulated but banking has got to be nationalized. Banks are middle men sucking money out of the economy. Oh and by the way I am a theist who would love to debate you!

[dangerouslytalented]

it is already removed. The executives of Hostess got million dollar payouts even though they allowed the company to collapse AND stole the pension plan. "too big to fail" should not mean "too big to jail". They should remove all the low level marijuana dealers from the prison and replace them with bank executives.

[lgically]

We can grow a spine. Why hasn't anyone been recalled? Three judges were recalled for supporting gay rights, but Americans can't bring themselves to fix something that actually matters.

[MoltenMetal]

It's called greed. Pure, raw, unadulterated greed.

[quacking]

One more bit of general philosophical perspective that's come to mind - there are people on this earth who are born, starve and die without ever experiencing anything other than horrific suffering on an unimaginable scale. Meanwhile...'fuck it, its only $72trillion, what could go wrong?'

[UCVibes]

Except the banks used the Derivatives as if the derivatives are a form of assets they can then trade and loan out and buy back.

[romanmir]

Stress test was NOT done to check what would happen when INTEREST RATES GO UP.

When interest rates go up, ALL of the banks that were bailed out and now are using the carry trade taking free money from the Fed and making a spread on the Treasury debt are bankrupt the moment real interest rates go above 3%.

ALL banks are insolvent, you can thank government for that, which 'insured' the banks with FDIC.

[Apoch]

Those amounts of money, and we can't feed the hungry, or provide for homeless... Yeah, that makes total fucking sense.

[shango]

When I hear about things like this, it's the only time that I am glad I have no money.

[romanmir]

There were never any less regulations in any year than in any previous year since 1913.

There were never any less laws in the next year than in previous year since 1913.

The money printing (Fed) and income taxing (IRS) are what allowed the gov't to grow and that growth resulted in all the moral hazards including FDIC, F&F, FHA, HUD, all the regulations that PREVENT competition (like the Patriot Act), all the gov't monopolies and bail outs

The gov't is the culprit, banking problem is a symptom

[romanmir]

No, the Fed creates credit that goes to the banks. The Treasury creates money in USA, but it creates it on both sides of the ledger, it's both an asset and a liability (bond is sold, there is a liability for interest payments and the principle, which is supposed to be bought back).

HOWEVER today the Fed buys about 90% of ALL new treasuries that are issued, to Fed monetises US debt.

What the Fed does NOT do is "pay for spending". It's not a payment if you do it with fake money, it's inflation.

[Hasb]

Videos like this help me understand why usury is a sin in all major religions.

My mom took out a 3, 000 loan from wells fargo in 2008. I was in my 12th year of highschool but I told her she was an idiot. She has paid back a total of $8000 on that loan and I'm not sure if they're going to withdraw in January or not, we're just hoping the last payment was last month.

Banks are thieves. God save us.

[stupidburp]

Risk is an integral part of banking. Banks are allowed to lend many times more than they have in assets and deposits. If all the loans go bad they can only cover a small fraction of this. Now, this is actually a very powerful way to promote business and grow the economy and is an essential part of our financial system. But, risk is unavoidable. The problem is that measurements of the level of risk for a particular investment are not always clear, seldom reported to account holders in sufficient detail, and there is little incentive to avoid higher risk. In fact, higher risk is often rewarded with performance bonuses linked to profitable activities without consideration for the accompanying risk involved. Perhaps risk could be a part of the formula used to determine bonuses. But then again, that would probably just encourage hiding or fudging the risk calculation which could lead to even bigger problems with hidden liabilities.