Published on

Major US Banks Masked Risk Levels: Report


Major U.S. banks temporarily lowered their debt levels just before
reporting in the past five quarters, making it appear their balance
sheets were less risky, the Wall Street Journal said, citing data from
the Federal Reserve Bank of New York.

The paper said on Friday 18 banks, including Goldman Sachs Group (NYSE:GS - News), Morgan Stanley (NYSE:MS - News), J.P. Morgan Chase (NYSE:JPM - News) Bank of America (NYSE:BAC - News) and Citigroup (NYSE:C - News),
understated the debt levels used to fund securities trades by lowering
them an average of 42 percent at the end of each period.

The banks had increased their debt in the middle of successive quarters, it said.

Citi, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley were not immediately available for comment when contacted by Reuters outside regular U.S. business hours.


Get our best delivered to your inbox.

Excessive leverage by the banks was one of the causes that led to the global financial crisis in 2008.

to the credit crisis, banks have become more sensitive about showing
high levels of debt and risk, worried their stocks and credit ratings
could be punished, the Journal said.

Federal Reserve Bank of New York could not be immediately reached for comment by Reuters.

(Reporting by Sakthi Prasad in Bangalore; editing by Karen Foster)

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Won't Exist.

Please select a donation method:

Share This Article