Why Banks Are Failing, Especially The Global ‘Too Big Banks To Fail’ Banks?
Why Banks Are Failing, Especially The Global ‘Too Big Banks To Fail’ Banks?
By Matthias Chang – FutureFast-Forward
Where do we start as we are inundated with minefields of scandals in regard to the global banking system – the lies, corruption and the deliberate cover-ups!
Maybe its best that I quote from a distinguished professor with impeccable integrity, Professor Amit Seru, the Professor of Finance at Stanford University’s Graduate School of Business, a Senior Fellow at the Hoover Institution and Research Associate at National Bureau of Economic Research (NBER).
He summarised the current crisis as follows:
The U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity. Marked-to-market bank assets have declined by an average of 10% across all the banks, with the bottom 5th percentile experiencing a decline of 20%.
Most of these asset declines were not hedged by banks with use of interest rate derivatives…. uninsured leverage (i.e. uninsured Debt/Assets) is the key to understanding whether these losses would lead to some banks in the U.S. becoming insolvent.
Please continue reading from the PDF below:
Download PDF
