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Media Focus on Trump Blindsides the Public from Rising Wall Street Risks

Courtesy of Pam Martens.

Source: Federal Reserve Supervisory Stress Test 2017 (Numbers Represent Billions of Dollars in Projected Losses in a Severely Adverse Scenario)

Source: Federal Reserve Supervisory Stress Test 2017 (Numbers Represent Billions of Dollars in Projected Losses in a Severely Adverse Scenario)

By Pam Martens and Russ Martens: June 27, 2017

There are some very serious undercurrents at work in the U.S. financial markets but they are getting short shrift on the front pages of newspapers as the President’s travails dominate the news. That’s working out well for Wall Street, which wants to keep the public slumbering as long as possible in hopes of gutting more financial regulations.

One of those serious undercurrents is the amount of risk being held by the biggest banks in the country. According to the Federal Reserve’s release of its Supervisory Stress Test, of the 34 Bank Holding Companies that are subject to its review, under a “severely adverse scenario,” meaning a deep recession, losses for the combined group are projected to be $493 billion.

Not to put too fine a point on it but that’s just 34 banks out of a total of 5,856 FDIC insured banks in the U.S. according to the FDIC’s March 31, 2017 database. The federal deposit insurance fund as of March 31, 2017 has on hand only $84.9 billion to bail out all banks that go under. That means that if there is, once again, contagion among Wall Street mega banks because they’ve all crowded into toxic debt with derivatives written on top, the taxpayer will once again be dragged kicking and screaming by Wall Street cronies in Congress to bail out the reckless bad boys on Wall Street and their multi-million dollar bonuses — which are somehow sacrosanct even when the recipients have put the nation in financial crisis.

The chart above from the Fed’s Supervisory Stress Test shows just how dangerous and irrational the U.S. financial system has become. The traditional role of banks to lend money to commerce and the consumer to keep the economy expanding and innovating and creating good jobs for Americans has been co-opted by Wall Street’s desire to trade and speculate and, eventually, blow itself up again.



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