The balance sheets of the big banks are black holes

October 1, 2015

Joseph Rodenberg

A World View, Intelligence Briefings

OCTOBER 2015 / NO. 1

TAGS: BALANCE SHEET, BANKS, BLACK HOLES, BANK OF ENGLAND, JORIS LUYENDIJK, IT CAN’T BE TRUE, BANKER, US, UK, STANDARD & POOR, FITCH, MOODY, CDO, FINANCIAL

The balance sheets of the big banks are black holes

“The balance sheets of the big banks are the blackest of all black holes”, Andrew Haldane, Chief Economist, Bank of England

We generally never deal with the same topic three times in a row. But in this case we have to, because there is so much wrong in the financial sector. What do you think about the above quote from the Bank of England’s Chief Economist, listed by TIME Magazine as being in the Top-100 most influential people in the world? To us this of great concern, though most people in the world don’t realize it.

Our latest insights come from research journalist Joris Luyendijk book “It Can’t Be True”.

Here is his list of the top-10 most remarkable insights:

There is deep mutual distrust in the middle of an amoral focus on profit and revenue responsibility
If you are under such huge pressure and will never be seen as legally responsible, then why, as a banker, should you not ‘screw’ a client
Top management at both US and UK banks didn’t have a clue where the profits came from, nor what the risks were
Standard & Poor’s, Fitch and Moody’s valued CDOs and their complex spin-offs as ‘super save’ and ‘triple-A’. Why didn’t the accountants or board of directors see this or tell us?
Standard & Poor’s, Fitch and Moody’s are paid by the banks, and yet they judge the banks’ financial products as though they are ‘independent’. This is similar to the inspectors of the Michelin Guide not tasting anonymously and being paid by the chefs they are evaluating
The top management of the banks does not know what is going on, because the banks are too large and too complex
If you had suggested at the peak of the crisis, that after the crisis no fundamental reforms would have been executed, no one would have believed you
In addition to being ‘too big to fail’, there are also ‘too big to save’ and ‘too big to manage’
Banks are still not transparent and never have taken formal leave from bankers who put the bank’s reputation at risk, neither the accounting firms and neither the credit-rating agencies. On the contrary, banks invested heavily in the lobby against the increase of the capital requirements
In the financial world, the ‘code of silence’ still rules the sector

“The next crash will hurt us extremely badly. The banks in Brussels, Amsterdam and in other capitals are just branch offices of the City and Wall Street. No government in the world has any control nor will they gain control in the years to come”

Dont miss out on our Intelligence Briefings. Subscribe to these free Intelligence Briefings by clicking HERE.

If you like to read our previously published Intelligence Briefings, please click here.

OCTOBER 2015 / NO. 1

TAGS: BALANCE SHEET, BANKS, BLACK HOLES, BANK OF ENGLAND, JORIS LUYENDIJK, IT CAN’T BE TRUE, BANKER, US, UK, STANDARD & POOR, FITCH, MOODY, CDO, FINANCIAL

The balance sheets of the big banks are black holes

“The balance sheets of the big banks are the blackest of all black holes”, Andrew Haldane, Chief Economist, Bank of England

Our latest insights come from research journalist Joris Luyendijk book “It Can’t Be True”.

Here is his list of the top-10 most remarkable insights:

There is deep mutual distrust in the middle of an amoral focus on profit and revenue responsibility

If you are under such huge pressure and will never be seen as legally responsible, then why, as a banker, should you not ‘screw’ a client

Top management at both US and UK banks didn’t have a clue where the profits came from, nor what the risks were

Standard & Poor’s, Fitch and Moody’s valued CDOs and their complex spin-offs as ‘super save’ and ‘triple-A’. Why didn’t the accountants or board of directors see this or tell us?

Standard & Poor’s, Fitch and Moody’s are paid by the banks, and yet they judge the banks’ financial products as though they are ‘independent’. This is similar to the inspectors of the Michelin Guide not tasting anonymously and being paid by the chefs they are evaluating

The top management of the banks does not know what is going on, because the banks are too large and too complex

If you had suggested at the peak of the crisis, that after the crisis no fundamental reforms would have been executed, no one would have believed you

In addition to being ‘too big to fail’, there are also ‘too big to save’ and ‘too big to manage’

Banks are still not transparent and never have taken formal leave from bankers who put the bank’s reputation at risk, neither the accounting firms and neither the credit-rating agencies. On the contrary, banks invested heavily in the lobby against the increase of the capital requirements

In the financial world, the ‘code of silence’ still rules the sector

“The next crash will hurt us extremely badly. The banks in Brussels, Amsterdam and in other capitals are just branch offices of the City and Wall Street. No government in the world has any control nor will they gain control in the years to come”

Dont miss out on our Intelligence Briefings. Subscribe to these free Intelligence Briefings by clicking HERE.

If you like to read our previously published Intelligence Briefings, please click here.