Posted by: coastcontact | March 15, 2013

We Are Too Big to Fail!

The Senate passed the $700 billion bank bailout bill on October 3 2008. The guts of the bill was the same as the three-page document submitted on September 21 2008, by Treasury Secretary Henry Paulson. Paulson had asked Congress to approve a $700 billion bailout to buy mortgage-backed securities that were in danger of defaulting. By doing so, Paulson wanted to take these debts off the books of the banks, hedge funds and pension funds that held them. The goal was to instill confidence in the functioning of the global banking system, which had narrowly avoided collapse.

Then came the annual bank stress tests.  The official name is Comprehensive Capital Analysis and Review, or CCAR.  The results of these tests would be to identify those banks and associated companies that were adequately capitalized. Those not having sufficient funds would be required to take action to resolve the issue.  The test is required for all banking institutions with $50 billion in total capital assets.

No banks were split apart and nothing was done to confront the fact that the four largest banking organizations overwhelmingly impact the entire nation.

Largest banks and thrifts in US by total assets

Total                 Total

Company                         City, State                 assets            deposits

JPMorgan Chase & Co.        New York, NY            2,250.8          1,127.8

Bank of America Corp.        Charlotte, NC             2,129.0           1,033.0

Citigroup Inc.                      New York, NY          1,873.9              865.9

Wells Fargo & Co.               San Francisco, CA      1,313.9             920.1

If any of these banks failed the United   States would step in to protect their well being.

Federal Reserve press release dated March 14, 2013.  “The Federal Reserve on Thursday announced it has approved the capital plans of 14 financial institutions in the Comprehensive Capital Analysis and Review (CCAR). Two other institutions received conditional approval, while the Federal Reserve objected to the plans of two firms.”

As to breaking apart the behemoths, not a word.

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