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Thread: Leaked! Bank stress results

  1. #1
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    Default Leaked! Bank stress results

    http://turnerradionetwork.blogspot.c...st-reults.html

    "The Turner Radio Network has obtained "stress test" results for the top 19 Banks in the USA.

    The stress tests were conducted to determine how well, if at all, the top 19 banks in the USA could withstand further or future economic hardship.

    When the tests were completed, regulators within the Treasury and inside the Federal Reserve began bickering with each other as to whether or not the test results should be made public. That bickering continues to this very day as evidenced by this "main stream media" report.

    The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.

    1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent. (Based upon the “alternative more adverse” scenario which had a 3.3 percent contraction of the U.S. Economy in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth of the U.S. Economy but a 10.3 percent jobless in 2010.)

    2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans. (Without further government injections of cash)

    3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.

    4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.

    5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.

    6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital! (HSBC is NOT in the top 19 banks undergoing a stress test, but is mentioned in the report as an aside because of its risk capital exposure to derivatives)

    7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!

    The debt crisis is much greater than the government has reported. The FDIC`s "Problem List" of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.

    Put bluntly, the entire US Banking System is in complete and total collapse."

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    Default Re: Leaked! Bank stress results

    ^^^ and this is AFTER the FASB relaxed bank accounting standards so that they could continue to list their mortgaged backed securites and other derivatives as being worth an amount close to 'face value' instead of being worth whatever price resulted at recent auctions / sales of similar securities !!!


    The 'tin foil hat' crowd would tell you that America has been almost completely dependent on the import of foreign capital for years now, with the banks essentially needing every dollar that was withdrawn and spent on Saudi oil or Japanese cars or Chinese electronics to be replaced by 'new' investment by the Saudis or Japanese or Chinese to remain in equilibrium. As the Saudis and Japanese (or more accurately the foreign carry trade borrowers of Japanese Yen loans) and Chinese become more and more reluctant to 'trust' both the future exchange rate of the US dollar and America's ability to repay, the true capital ratios of the big US banks have steadily deteriorated. Thus the 'tin foil hat' crowd would argue that American banks and borrowers have been playing a cash flow 'shell game', where the bank pretends that it's capital assets are still worth something and the borrower pretends that their home is still worth something. When this cash flow is disrupted, the true worth of the underlying assets comes into question in a big way !!!


    If the stress test data is true ... or put another way if the 'exotic' capital assets held by these banks are as nearly worthless as many suspect ... then things are likely to get very interesting very soon for holders of US dollars !!!


    I would also point out that the NCUA insurance fund is in even worse shape than the FDIC insurance fund ... although arguably the true capital ratios of most credit unions is far more solid than that of most banks. And don't forget that the FHLB is also undercapitalized to the point where their CEO resigned a couple of weeks ago. And to finish the point, don't forget that Fannie and Freddie already have a direct commitment from the US FED to 'insure' their losses which bypasses all of the other gov't insurance fund obligations !

    PS we haven't even touched on the losses / obligations of other types of gov't insurance - like pension benefit guarantees, student loan guarantees etc.

    PPS this is also all happening at a time when the US gov't is still reeling over the reduced amount of actual tax revenues it received through April 15th, is running a record amount of deficit cash flow (i.e. Social Security checks sent out totalled more dollars than Social Security taxes brought in last month), and is committed to spending huge additional amounts as the Obama stimulus package projects need federal cash to get underway. As a result, the US gov't is going to need to turn to foreign investors for capital (i.e. needs to sell huge numbers of newly printed treasury bonds) at the same time that US banks need to turn to those same foreign investors for the same capital !!!


    UPDATE : it would appear that the bank stress test results are NOT being reported by any mainstream financial media. However, stock values of most big banks are off a whole bunch in European trading. The conspiracy theorists would probably attribute this to gov't censorship ... which in turn will allow the 'smart money' to get out of their bank stock holdings before the full impact of the stress test results trickles down to pension funds and individual investors !

    ~
    Last edited by Melonie; 04-21-2009 at 04:24 AM.

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    Senior Member patchouli's Avatar
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    Default Re: Leaked! Bank stress results

    So what does this mean for consumers who say, have money in one of those 16 banks, or have a credit card with them?

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    Default Re: Leaked! Bank stress results

    ^^^ well assuming that those consumers had less than the FDIC insured $250k maximum balance, they will eventually get their money back if the bank actually does fail. As to the precise definition of 'eventually', this depends on how many banks continue to deplete what remains of the FDIC insurance fund (which is already nearly 50% depleted due to the failure of much smaller banks over the past year), whether or not the FED agrees to loan the FDIC 'bailout' money etc. In the worst case, account holders would have to wait until future payments of FDIC insurance premiums were made by the still solvent banks, so that the FDIC could in turn pay out the money collected via these insurance premiums to the insured depositors of belly-up banks - which could mean insured depositors having to accept small repayments over a period of several years (with zero interest payments) until they receive all of their money back.

    As to the credit card, unless another bank agrees to buy out the bank that goes belly-up and take over its existing credit card accounts, the credit card becomes immediately unusable. You would still be expected to repay any outstanding balance of course, since the FDIC will need every 'recoverable' dollar it can lay its hands on to help pay off depositors !

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    Senior Member patchouli's Avatar
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    Default Re: Leaked! Bank stress results

    ^^Thank you for the info.

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