Deutsche Bank is now been classified as a problem bank by FDIC and has been included in a list of banks to be watched. This is the biggest bank in Europe. It cannot be merged within Germany with Commerce Bank for there is just not enough equity to overcome the derivative losses. The only other candidate is BNP, but that is a French bank. This is where the fairytale of Euroland ends. They wanted to create a single currency, but they were unwilling to actually merge the economies. This is why our sources in Italy argue they are now an occupied country. Continue reading →
It looks like Deutsche Bank is heading toward failure. Why might we be concerned?
The problem is that Deutsche is too big to fail — more precisely, that the new Basel III bank resolution procedures now in place are unlikely to be adequate if it defaults.
Let’s review recent developments. In June 2013 FDIC Vice Chairman Thomas M. Hoenig lambasted Deutsche in a Reuters interview. “Its horrible, I mean they’re horribly undercapitalized,” he said. They have no margin of error.” A little over a year later, it was revealed that the New York Fed had issued a stiff letter to Deutsche’s U.S. arm warning that the bank was suffering from a litany of problems that amounted to a “systemic breakdown” in its risk controls and reporting. Deutsche’s operational problems led it to fail the next CCAR — the Comprehensive Capital Analysis and Review aka the Fed’s stress tests – in March 2015. Continue reading →
WASHINGTON: The Chinese government likely hacked computers at the Federal Deposit Insurance Corporation in 2010, 2011 and 2013, according a congressional report on Wednesday that cited an internal investigation by the banking regulator. Continue reading →
Yesterday the Federal Reserve released a 19-page letter that it and the FDIC had issued to Jamie Dimon, the Chairman and CEO of JPMorgan Chase, on April 12 as a result of its failure to present a credible plan for winding itself down if the bank failed. The letter carried frightening passages and large blocks of redacted material in critical areas, instilling in any careful reader a sense of panic about the U.S. financial system.
A rational observer of Wall Street’s serial hubris might have expected some key segments of this letter to make it into the business press. A mere eight years ago the United States experienced a complete meltdown of its financial system, leading to the worst economic collapse since the Great Depression. President Obama and regulators have been assuring us over these intervening eight years that things are under control as a result of the Dodd-Frank financial reform legislation. But according to the letter the Fed and FDIC issued on April 12 to JPMorgan Chase, the country’s largest bank with over $2 trillion in assets and $51 trillion in notional amounts of derivatives, things are decidedly not under control. Continue reading →
Five out of eight of the biggest US banks do not have credible plans for winding down operations during a crisis without the help of public money, federal regulators said on Wednesday. Photograph: Mike Blake/Reuters
Now you have an indication of just how desperate the government is to find funds so it can fix the transportation system — if it’s really going to go towards that in the end, that is. Not only that, raiding (nationalizing) the banks is going to force banking to become more expensive and the fees are always passed on to the consumer. A new hatred towards bankers will begin thanks to the government plundering its own banking system, which in the end is its own people.
A transportation bill in Congress has put the U.S. well on the road to socialism, Dick Bove said Monday.
The bipartisan Senate bill, announced in July, would cut the dividend paid by the Federal Reserve to banks each year from 6 percent to 1.5 percent, and the difference would go toward funding highway projects Continue reading →
President of Greek Banks Association Louka Katseli appealed at the citizens to return their money to the banks. “Banks are absolutely trustworthy,” Katseli told Mega TV “as guaranteed by the ECB and the Bank Association, but they would have been even more powerful if 40 billion euros had not been withdrawn in the last months.
Katseli, a former PASOK Minister, appealed to citizens to return their deposits to the banks “now that the banks are open” after a three-week holiday and capital controls.
“Let’s all help our economy,” Katseli urged Greeks and added “If you take your money out of your chests and houses – which are not safe in any case – and deposit at banks, this will enhance liquidity.” Continue reading →
The financial system is predominantly comprised of digital money. Actual physical Dollars bills and coins only amount to $1.36 trillion. This is only a little over 10% of the $10 trillion sitting in bank accounts. And it’s a tiny fraction of the $20 trillion in stocks, $38 trillion in bonds and $58 trillion in credit instruments floating around the system.
Suffice to say, if a significant percentage of people ever actually moved their money into physical cash, it could very quickly become a systemic problem.
Indeed, this is precisely what caused the 2008 meltdown, when nearly 24% of the assets in Money Market funds were liquidated in the course of four weeks. The ensuing liquidity crush nearly imploded the system. Continue reading →
– 11 countries face legal action if bail-in rules are not enacted within two months – Bail-in legislation aims at removing state responsibility when banks collapse – Rules place burden on creditors – among whom depositors are counted – Austria abolished bank deposit guarantee in April – “Bail-in regimes” coming globally
The European Commission has ordered 11 EU countries to enact the Bank Recovery and Resolution Directive (BRRD) within two months or be hauled before the EU Court of Justice, according to a report from Reuters on Friday.
Irony #2, and the biggest one of all: while German banks had spent the past 3 years preparing for the inevitable Grexit and offloading all their exposure to the now insolvent Greek state, it was a waterfall chain of events which started in Germany’s own “back yard”, courtesy of auditors who decided it was unnecessary to mark losses to market until it was far too late, and the immediate outcome is that one ninth of until recently Aaa/AAA-rated Austria is now also insolvent. And that is just the beginning.Continue reading →
Last week I had over $1,000,000 in a checking account at Bank of America. Next week, I will have $10,000.
Why am I getting in line to take my money out of Bank of America? Because of Ben Bernanke and Janet Yellen, who officially begins her term as chairwoman on Feb. 1.
Before I explain, let me disclose that I have been a stopped clock of criticism of the Federal Reserve for half a decade. That’s because I believe that when the Fed intervenes in markets, it has two effects — both negative. First, it decreases overall wealth by distorting markets and causing bad investment decisions. Second, the members of the Fed become reverse Robin Hoods as they take from the poor (and unsophisticated) investors and give to the rich (and politically connected). These effects have been noticed; a Gallup poll taken in the last few days reports that only the richest Americans support the Fed. (See the table.) Continue reading →
It appears that the expiring expanded FDIC insurance has in fact triggered a massive deposit withdrawal at the nation’s largest banks, as the Fed is reporting that $114 billion were withdrawn from the largest 25 US banks over the first week of January, the largest fund outflow since the 9/11 attacks, even exceeding the pace of the outflow during the 2008 financial panic!Continue reading →