Fascinating Bank Lies

Bank of America’s shares fell below $5.00 last week, their boss said “We greatly strengthened our risk culture in 2011, and that work has laid the foundation that will carry us through whatever turbulent times may lie ahead, 2012 will be a year for continued improvement in risk-management practices across the company.” Obviously the markets don’t quite agree.

This is what a safe bank account looks like

Here’s some of the lies the major banks were telling back in 2008 at the time of the subprime crisis, and how much money they got from the Fed to keep their doors open on the exact dates that their borrowings peaked.

All the banks below were just weeks away from defaulting and going bankrupt. Here are the quotes from Bloomberg’s.

• On September 21, 2008, Morgan Stanley CEO John Mack said, “Morgan Stanley is in the strongest possible position.” By September 29, 2008, they had borrowed $107 billion from the Fed and took another $10 billion in TARP money.
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• On January 16, 2009, Citicorp CEO Vikram Pandit said, “We have an irreplaceable franchise.” By January 20, 2009, they had borrowed $99.5 billion from the Fed and took $45 billion in TARP money.
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• On January 22, 2009, Bank of America CEO Kenneth D. Lewis said, “The diversity and strength of our company is allowing us to continue to invest in our business to drive future profit growth.” By February 26, 2009, they had borrowed $91.4 billion from the Fed and took $45 billion in TARP money.
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• On December 16, 2008, Goldman Sachs CEO Lloyd Blankfein said, “Our deep and global client franchise, experienced and talented people and strong balance sheet position our firm well.” By December 31, 2008, they had borrowed $69 billion from the Fed and took $10 billion in TARP money.
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• On February 23, 2009, JPMorgan Chase CEO Jamie Dimon said, “We believe we have a fortress balance sheet.” By February 26, 2009, they had borrowed $48 billion from the Fed and took $25 billion in TARP money.
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• On March 6, 2009, Wells Fargo CEO John Stumpf said, “We couldn’t feel better about the future.” Meanwhile, as of February 26, 2009, they had borrowed $45 billion from the Fed and took $25 billion in TARP money.

So you should be very suspicious of the B of A’s rosy quote at the top of this piece, it tells you things are very shaky. The B of A have just agreed to pay $335 million to settle a lawsuit that claimed they crookedly screwed black and Latino borrowers on home loan deals. I’m not sure if that is part of their “…continued improvement in risk-management practices across the company” or not—tee hee.

People say a major European bank is about to close. I don’t know which one, but Commerzbank just asked the German government for another bailout might be that one. Some say the bank is Spanish. Soc Gen may be on its last legs as well. Stuart Wilde (www.stuartwilde.com)

A second look at what a safe account looks like in case you missed it, put your money in cash or gold in a box in this thing with the nice metal door.