The Great Bank Swindle

The Great Bank Swindle - The entire US banking system has only $1.4 trillion of capital. Therefore, the US banking system is effectively insolvent.
McKinsey has concluded that there are still $2 trillion of toxic assets sitting on the books of US banks. The International Monetary Fund has estimated total credit write-downs of $4.1 trillion, with $2.7 trillion in US institutions alone. And Nouriel Roubini estimates the total losses on loans made by US financial firms will reach $1.6 trillion, with an additional $2 trillion in losses on securities. The US banks and broker dealers are exposed to half of this figure, or $1.8 trillion; the rest is borne by other financial institutions in the US and abroad. What’s even worse: That $1.8 billion figure doesn’t include commercial real-estate losses, credit-card losses, and losses from the next wave of mortgage resets in 2010. With $2 trillion of write-offs to go, how could Treasury Secretary Timothy Geithner make the following statement to a Congressional panel last week: “Currently, the vast majority of banks have more capital than they need to be considered well capitalized by their regulators.”? The entire US banking system has only $1.4 trillion of capital. Therefore, the US banking system is effectively insolvent. While there are 8,500 banks in the United States, the top 19 control 45% of all deposits - and these are the banks that are insolvent. Citigroup (C), Bank of America (BAC), Wells Fargo (WFC) and the other “too big to fail” banks are the ones who created the toxic loan instruments that went on to infect the worldwide economic system. The vast majority of the 8,500 banks in the country are in good shape. [more]