You have no clue how bad bank balance sheets really are

black hole

Georgian Bank, which wasn’t on the FDIC list of problem banks as of June 30, failed last week. How many more banks are looming in the darkness out there that appear to be healthy but aren’t?

What’s scary is that this level of opacity likely extends upwards to the ranks of the too-big-to-fail institutions that can’t be rescued merely by making depositors whole. As the story about JPMorgan’s Jamie Dimon — sitting in his office, examining the bank’s CRE exposure by zipcode suggests — even most of the banks have no idea what they’re holding. How could regulators?

It’s just out of control. Banks are getting hundreds of billions in bailout money. Yet, as shown by JPMorgan, their CEO and apparently everyone else there, has no clue what they own what their exposure is. How about they all get fired and replaced by people with actual competence?

What’s needed is that banks get real audits by independent outsiders who use genuine numbers to determine real estate values, and not the fantasy, made-up numbers that banks use now.

You know what’s even more insane? The FDIC is billing banks three years in advance to pay for expected rescue efforts now.

One comment

  1. The FDIC is going to the banks for money, because if they go to the Treasury Department they will have to open their books for inspection.

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