Biggest US Banks Are Even Bigger Than They Seem
Posted at 8:45 a.m. on Feb. 21
Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, is seeking to bring US accounting rules in line with international standards for derivatives and mortgage-backed securities, which Bloomberg reports would “make the banks twice as big as they say they are — or about the size of the U.S. economy.”
“JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. would double in assets, while Citigroup Inc. would jump 60 percent… Total assets of the country’s banking system would be 170 percent of economic output, still lower than 326 percent for Germany.”
“Off-balance-sheet assets and derivatives were at the root of the 2008 financial crisis. Mortgage securitizations kept off the books came back to haunt banks forced to repurchase home loans sold to special investment vehicles.”
