FDIC Slams Biggest US Banks, Says Capital Reserves “Inadequate”

Friday, August 19, 2016
By Paul Martin

August 19, 2016

On Friday morning, a gentleman named Thomas Hoenig (who happens to be the #2 executive at the FDIC) wrote some rather unflattering comments about the US banking system in a little known publication called the Wall Street Journal…

Submitted by Simon Black, Sovereign Man:

In his remarks, Hoenig stated that “while the largest U.S. banks have increased capital since the [2008] crisis, their capital is still lower than the industry average and inadequate for bank resiliency.”

Think about what means. A bank’s “capital” is essentially its rainy day reserve fund.

If there’s a giant mess in the financial system and asset prices collapse (as they did in 2008), a bank with plentiful capital will be able to withstand the crisis.

Banks with inadequate capital will fail.

Hoenig is suggesting that many of the largest banks in the US fall in the latter category.

More importantly, Hoenig slammed the ridiculous accounting methods that banks use to report their financial condition, something he said “too easily allows banks to conceal risk.”

The Rest…HERE

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