America on a ticking mine

19
Beginning with 2009, all major US banks must pass an exam called stress test. The ability of banks to resist abrupt changes in economic and financial conditions is being tested. Simply put, survival is assessed if a financial crisis begins in America, similar to the one she experienced in 2007-2009.

During all the years of testing, most US banks received a rating of "satisfactory" and then with great stretch. Some banks had to retake the exam. The examiners are financial regulators, primarily the US Federal Reserve. Examined are backbone banks, about which they say too big to fail. It is understood that the size and number of bonds of these banks are so large that their bankruptcy will have disastrous consequences for the economy as a whole.

Table. 1.

Assets of the largest US banks (on 15 September 2014 of the year)



Banks

Total assets


JP Morgan Chase

2.527,00

Bank of America

2.123,61

Wells Fargo

1.636,86

Citigroup

1.882,85

Goldman Sachs

868,93

Morgan Stanley

814,51

As can be seen from the table. 1, total assets of the “big six” of American banks as of 30 in September, 2014 were equal to 9,85 trillion. dollars. The total assets of the entire banking system at that time amounted to 15,35 trillion. That is, six banks account for almost 2 / 3 of all assets of the US banking system.

We can add on the total assets of the “big six” to the assets of the following six banks (trillion dollars): US Bancorp. (0,39), Bank of New York Mellon (0,39), PNC Financial Services Group (0,33), Capital One (0,30), HSBC North America Holdings (0,28), State Street Corporation (0,27). We get that the assets of the big dozen are equal to 11,81 trillion. dollars, or 76,8% of total assets of the entire US banking system. For banks located outside of Top-20, asset ratios are plummeting. For example, Synovus Financial Corporation, which holds a 50 line in the list of American banks, has assets equal to 26,5 billion dollars. That is, it is almost two orders of magnitude smaller than that of JP Morgan Chase.

By the way, at the beginning of 2014, the number of banks in the US was 6.981. It turns out that a huge number of banks is a trifle against the background of the “big six” and “big dozen”. Wall Street giants of the banking business consistently absorb small, medium and even relatively large banks every year. The Fed has been tracking the number of banks in the US since 1934. At the peak of growth in the mid 1980-s in the United States, there were over 18 thousand banks. Over the past three decades, more than 11 thousands of banks have died. In the 2013 year, their number for the first time dropped below the 7 thousand, which is less than in the 1934 year. The financial crisis of 2007-2009 played its role in clearing the US banking sector, when most banks with assets of less than 100 million left the market.

Financial regulators are only interested in the largest US banks. Stress testing every year pass 20-30 banks. The main benchmark for obtaining a positive assessment on the exam - capital adequacy ratio. The bank must have its own capital, and in a liquid form, in order in case of an emergency to be able to cover its obligations (obligations to customers who have opened deposits, other creditor banks, etc.). Banks, unlike companies in other sectors of the economy, are allowed to work with incomplete coverage of their obligations. And the secret of their stability lies in the fact that at critical moments, the central bank, the lender of last resort, and the state that provides loans to a sinking bank or increases the bank’s own capital, rush to save the banks. During the financial crisis, 2007-2009's. According to various estimates, the US banking system was pumped from 1 to 2 trillions of budget money. Despite such generous injections, all could not be saved. The largest loss of that time is the banking giant Lehman Brothers. By the way, on the eve of the financial crisis, some of the leading Wall Street banks (Citigroup, Morgan Stanley, and others) had a capital adequacy ratio of around 4%.

And what about this indicator after the crisis? Here are the results of stress testing for 2014 year of the "big six" US banks (%): Wells Fargo - 8,2; Citigroup - 7,2; Goldman Sachs - 6,9; JP Morgan Chase - 6,3; Morgan Stanley - 6,1; Bank of America - 5,9.

In the 2015 year, there were no radical changes from last year. The capital adequacy assessment for JP Morgan Chase was 6,5%, for Goldman Sachs - 6,3%, for Morgan Stanley - 6,2%, etc. Of the major banks in the top ten, Bank of New York Mellon had the best indicator - 12,6%. In general, the value of this indicator in the US banking system, according to expert estimates, is at the level of 5%. This level is considered the minimum acceptable for banks undergoing testing. That is, the situation with the stability of American banks is far from satisfactory.

In Europe, banks are also tested, but the requirements for the examinees are stricter there than in America. Some European banks on the background of the American financial organizations look just excellent students. For example, at Deutsche Bank, the capital adequacy ratio is 34,7%.

The US Federal Reserve does not hide the fact that four leading Wall Street banks in 2015 have passed the exam with great difficulty. These are Goldman Sachs, JP Morgan Chase, Morgan Stanley and Citigroup Inc. These banks were exposed to the conditions and restrictions on the implementation of the submitted financial and investment plans. The main limitation is the payment of dividends to shareholders. In addition, troubled banks are being restricted to repurchase their shares (such an operation, as we know, is a way to increase the market capitalization of a bank).

The top managers of Citigroup are pleased even with a conditional satisfactory assessment, since the bank had completely failed the exam twice, which had a bad effect on its rating and market capitalization, while dividend payments were postponed to a later date.

This year, two American divisions of European banks, Deutsche Bank AG and Banco Santander SA, participated in the testing of the Fed, and both received a “deuce”. Some experts call these “twos” a biased assessment, a peculiar form of bank protectionism. Plans to direct their American divisions to the annual FED exam were such European banks as Credit Suisse, Barclays and UBS, but the failure of Europeans in the final exam made them think.

Wall Street banks today are paying for the lack of control that existed in America’s financial sector from the beginning of the 1980s to the 2007-2009 crisis. When R. Reagan began the process of "deregulation" of the banking sector. In particular, restrictions on interest rates on deposit operations of banks began to be lifted. An important milestone was the 1999 year, when the Glass-Stigoll law was actually repealed - one of the first banking laws passed under President F. Roosevelt in the 1933 year. He introduced a rigid division of banks into commercial and investment, which allowed to restrain speculations of bankers in financial markets, which put at risk the loss of customer funds. The last major act of “deregulation” of banking activity took place under Bush Jr. In 2004, the US Securities and Exchange Commission allowed investment banks to lend securities purchase transactions without restriction (this led to the 1929 exchange crash of the year). Banks did not fail to take advantage of this right by starting the pumping up of a “bubble” in the market of securities secured by mortgage loans.

Today, Wall Street banks are between the hammer and the anvil. On the one hand, shareholders are demanding payment of generous dividends and an increase in the market capitalization of banks, that is, stock prices, and senior bank managers are unhappy that after the crisis, bonuses have been severely curtailed. On the other hand, financial regulators are trying to restrain the greedy aspirations of shareholders and managers. The memory of the financial crisis 2007-2009. not yet eroded from the minds of Americans. Regulators give very specific recommendations. So, according to the results of last year's exam, Morgan Stanley received insistent advice to increase its own capital by 13,66 billion dollars, Goldman Sachs - by 9,46 billion dollars, and by JP Morgan Chase - 8,38 billion dollars.

The US banking system is experiencing strong internal stresses. The results of stress testing banks show that America lives in a time bomb called the US banking system. And sooner or later this mine will explode. According to the former chief economist of the IMF, Simon Johnson, the low level of banks' equity capital combined with the slowness of financial regulators created a serious threat to the US economy. Today, the situation in the American economy, says Simon Johnson, recalls the events that led to the financial crisis: “We have already seen this film, and it ended badly. Next time we can see an even more creepy thriller. ”
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19 comments
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  1. +11
    22 May 2015 14: 05
    When will it explode !!! That will be a salute, worldwide !!!
    1. +8
      22 May 2015 14: 09
      Yes, they promise everything, they promise, we will not wait))
    2. +11
      22 May 2015 14: 13
      Quote: Baikonur
      When will it explode !!! That will be a salute, worldwide !!!

      Exactly, demom sprinkles everyone ...
    3. +13
      22 May 2015 14: 35
      Quote: Baikonur
      When will it explode !!! That will be a salute, worldwide !!!

      It’s necessary to undermine slowly so that the whole pyramid does not bury everything around. But the process has been launched and countries are gradually switching to their own currencies in calculations. Actual gold is bought, and so on ... hi
    4. +4
      22 May 2015 16: 16
      When it explodes, it will not seem enough to anyone .. "Safe harbors" simply will not be.

      To die them .. but somehow quietly .. dreams, dreams ..
      1. +5
        22 May 2015 20: 22
        I would still prefer a sharp and loud ending. Let the United States in its own skin experience all the horrors that befell Russia in the terrible nineties.
    5. +3
      23 May 2015 18: 38
      Dreams, dreams, where is your sweetness. But in reality, nothing happens, and these forecasts do not concern a simple American, because where is the printing press? And give loans to the population under a much lower percentage, and war, that would not be in the neighborhood, and where to buy oil and gas, and where for nothing. In the USA, some kind of hereditary unemployed nigga receives more benefits than a retired labor veteran in Russia. And as long as the United States walks in partners, while in an active role, and all the rest only substitute, there is nothing to be afraid of as an American. China except that goes its own way, having everyone around.
  2. +5
    22 May 2015 14: 31
    American banks, well, give money to Ukraine already!
    And you will be happy!
  3. +1
    22 May 2015 14: 37
    Yes, everything is in the know ... mother wrote
  4. -1
    22 May 2015 14: 51
    And the West is decaying, but it will not decay completely :)
  5. +1
    22 May 2015 14: 52
    Banks, unlike companies in other sectors of the economy, are allowed to work with incomplete coverage of their obligations


    For me, this is beyond understanding! This is a natural fraud. Even I understand that with such arrangements (5% of the average coverage of obligations), no one has ever intended and is not going to repay debts. The poor president of the United States, everyone pours his mud on him, declines how much in vain, blames all mortals ... but he does not solve anything, poor fellow.
  6. +2
    22 May 2015 15: 14
    Like Yellowstone. Everyone says that right, but still. So it is with the Amer pyramid: we are sitting with popcorn and waiting. request
    1. 0
      25 May 2015 12: 47
      but if Yellowstone fucks, then I'm afraid humanity will not survive this ...
  7. +9
    22 May 2015 15: 34
    From the beginning, it is necessary to withdraw all our monetary resources from American and European banks. Further get rid of dollars and euros domestically. China needs to do the same. Only then can their banking system be torn, only then it will not affect Russia, or if it does, then to a minimal extent. And before that you can’t do this, because in Russia and China there will also be severe economic crises. Our dollar reserves in American banks will disappear, and the dollars and euros stored in our banks will turn into toilet paper.
    1. +6
      22 May 2015 17: 22
      Not so simple as you write.

      The fact is that the Russian bank is built in the type and likeness of the American. We will say the bank, because they are all connected.

      System errors of a Russian bank are absolutely identical to system errors of an American bank.

      Improving the financial sector is only possible with a change in the banking system. But behind the preservation of the existing order there are forces in power superior to, say, China.

      Everything is very running.
      1. +1
        22 May 2015 20: 28
        But there is one plus: when it explodes very sharply, no one will get away from reckoning, not one speculator, every parasite and traitor will finally be grabbed by the hand at the crime scene, caught red-handed! And if he slowly decays, then all this evil will have time to translate the loot into safe assets and shed it. Therefore, I am in favor of a catastrophic, explosive scenario. We, commoners, will be scared, but that's all. We had no money before. But all of these capital-gouges, these pompous money bags, become impoverished in a flash. Then we will remember the meaning of the word Homeland. And the era of Stalin will be remembered, but it will be too late.
  8. +4
    22 May 2015 17: 12
    Thank you for the article V. Katasonov. I enjoy watching your lectures on YouTube. And everyone is recommended. It becomes clear who this world government is. And then everything about some international corporations is ubiquitous and unknown.

    It turns out it’s like, usurers without control. It's time to write them down for a long time in an accountant for servicing interest-free loans.

    Only such attempts end in the assassinations of presidents. Maybe at the time of re-election, they will get confused who to shoot and the check will be effective.

    The dog is buried in the phrase: "about the liquidity of banks."

    Thanks again and thanks for the lectures.
  9. +3
    22 May 2015 18: 50
    ppppppppppppppppppppppppp
  10. 0
    22 May 2015 18: 51
    ppppppppppppppppppppppp
  11. +1
    22 May 2015 18: 52
    ppppppppppppppppppppppppppppp
  12. 0
    22 May 2015 18: 53
    ppppppppppppppppppppppppppppppppppp
    1. 0
      22 May 2015 20: 34
      Do not touch Obama! He’s just a puppet, he turns the Senate right and left! Congressmen - the root of evil in them!
  13. +2
    22 May 2015 18: 53
    ppppppppppppppppppppppppppppp
  14. +1
    22 May 2015 18: 54
    ppppppppppppppppppppppppppp
  15. 0
    22 May 2015 18: 55
    ppppppppppppppppppppppppppppppp
  16. 0
    22 May 2015 18: 55
    ppppppppppppppppppppppppppppppppp
  17. +2
    22 May 2015 18: 56
    ppppppppppppppppppppppppppppppppp
  18. 0
    22 May 2015 18: 56
    ppppppppppppppppppppppppppp
  19. +2
    22 May 2015 18: 57
    ppppppppppppppppppppppppp
  20. +1
    22 May 2015 18: 58
    ppppppppppppppppppppppppppppppp
  21. 0
    22 May 2015 19: 46
    mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm
  22. +2
    22 May 2015 19: 53
    As we say: "And Vaska listens, but eats!" Our oracles, by the way, together with the American ones, have been singing the funeral of the US economy since 2008. And she does not want to die. They will print how many dollars they need and live happily ever after!
    Moreover, the whole world, all politicians and all terrorists put together have already bought up this printed paper!
  23. +2
    23 May 2015 04: 19
    ocean merchants will find a way once again to throw everyone, as it was already ...
    1. 0
      23 May 2015 18: 19
      Here they are the "hunger games" and stir up the world ...
  24. -1
    23 May 2015 19: 23
    The US banking system lacks green cabbage, and the printing press in the basements of the Lubyanka does not work to help the Fed. Why? Help American bankers, partners in misfortune.
  25. 0
    25 May 2015 06: 18
    I watched the film "Risk Limit", most likely the situation will repeat itself, someone will begin to get rid of "bad" assets, which will cause a chain reaction.

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