Yesterday we reported how The Fed simply stopped reporting unrealized gains and losses on their securities…only to find that U.S. Banks have suffered a $516 Billion loss…so far.
Adding gasoline to this fire, a recent academic study found that over 75% of US Banks didn’t even hedge their portfolios against rising interest rates.
Translation: During the fastest pace of Fed interest rate hikes in 40 years, these morons failed to protect their portfolios.
How dumb can you get and still breathe?
It gets worse.
The academic study also showed…
“Banks with the most fragile funding – i.e., those with highest uninsured leverage — sold or reduced their hedges during the monetary tightening. This allowed them to record accounting profits but exposed them to further rate increases.
These actions are reminiscent of classic gambling for resurrection: if interest rates had decreased, equity would have reaped the profits, but if rates increased, then debtors and the FDIC would absorb the losses.”
In Plain English: Classic gambling – to describe 75 percent of the U.S. banking system by highly credentialed academics – should be something that the U.S. Senate Banking Committee needs to hold hearing about with some sense of urgency.
Unfortunately, it probably won’t happen any time soon.
Because an equally disturbing fact is that the very largest banks in the U.S. – the ones that pose systemic risk to both the banking system and the U.S. economy – only hedge “one third of their securities.”
And they don’t want it to be known that they are teetering on the brink of collapse…again.
Suffering $516 Billion Loss
Sadly enough, a vast majority of people are clueless to what’s happening on the banks’ balance sheets.
And the remaining group thinks that these problems will somehow fix themselves.
But what they don’t realize is how the reckless gambling by the banks can be profitable for bank shareholders on the upside, but the losses are borne by the FDIC on the downside.
Cue up publicly traded Silicon Valley Bank (SVP Financial Group) has gone from a share price of more than $300 in February to a recent closing share price of 5 cents.
And because of this lack of hedging – according to the FDIC’s quarterly report for the quarter ending March 31, 2023 – unrealized losses on securities at U.S. banks stood at the staggering sum of $515.5 billion…chart below.
Meanwhile, the most corrupt banking group in the world, JP Morgan Chase, has agreed to pay the US Virgin Islands (USVI) a scant $75 million to settle a lawsuit alleging that the bank knowingly aided Jeffrey Epstein’s underage sex-trafficking operation.
And we still don’t have the list of clients.
But that’s another $516 Billion story for another time.
Suffice it to say that Banksters lying to protect their corruption knows no boundaries.
READ: More lies from Banksters May 3, 2023 (HERE)
Don’t be their victim.
Instead learn how to protect your investments from the next major banking crisis in our October edition of “…In Plain English” (HERE).
Share this with a friend…especially if they keep a lot of money in a big bank.
They’ll thank YOU later.
And tell them:
We’re Not Just About Finance
But we use finance to give you hope.
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