Courtesy of Pam Martens.
OCC Chart Showing Underwriting Trends Now and Going Into the Crash of 2008
By Pam Martens and Russ Martens: December 10, 2015
The Office of the Comptroller of the Currency (OCC), which regulates national banks, including the behemoth Wall Street banks that either blew themselves up or became part of shot-gun marriages during the 2008 crash to avoid outright collapse, issued a warning yesterday that credit risks are rising at banks. The rising risks are the result of a loosening of loan underwriting standards, which, says the OCC, “reflects broad trends similar to those experienced from 2005 through 2007, before the most recent financial crisis….”
The first question that comes to mind from this report is what good is increased capital at the mega banks if the banks are simultaneously increasing the riskiness of the loans on their books. The next question is why the regulators have sat back and watched this risk grow over the past tumultuous year without nipping it in the bud. And the final question is what does the Financial Stability Oversight Council (FSOC) – the coalition of all the bank and Wall Street regulators that huddle together regularly in secret – plan to do about this growing threat to financial stability.
It’s not like the 2008 crash occurred to some other generation. We’re the taxpayers that had a gun put to our collective heads to bail out the banks and balloon the national debt to $18.4 trillion to revive an economy that Wall Street blew up just seven years ago. We’re the same taxpayers that found out after the fact that the Federal Reserve had secretly pumped over $16 trillion in cumulative loans to Wall Street, domestic and foreign banks and U.S. corporations in the name of saving the financial system. We’re the citizens that have had to bear the economic brunt of an economy that can’t grow above a two percent rate because of that epic financial crash and its aftermath. And, we’re the same taxpayers that will pay for the next bailout if these same too-big-to-fail banks implode again under the weight of their own hubris and the incompetence of their regulators – an outcome that seems likelier with every passing day.
As it turns out, FSOC is well aware of the growing risks at the banks. Its ingenious plan is to take the same action regulators took going into the 2008 crisis: to “monitor” the imprudent risk-taking rather than stopping it. According to FSOC’s 2015 annual report, it’s well aware of the following:
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