Wall Street Continues To F*ck U.S.



Specifically, studies have shown that most of the major banks often reduce the amount of money that they’re borrowing at the end of each quarter, in order to make their balance sheets look prettier.  Once the new quarter begins, they then crank up the leverage (and risk-taking) again….

As the banks are quick to point out, this manipulation is perfectly legal. It just provides a misleading impression of the actual riskiness of the bank. It also makes the bank appear to have a higher return on capital than it actually does (because the quarter’s earnings, which are produced with the higher debt through the quarter, are then compared to the capital the bank has on hand at the end of the quarter).

A recent study by the Wall Street Journal reveals that, not only are banks still engaging in this practice, it has actually gotten worse in the past few years.  Bank of America, Citigroup, and Deutsche Bank are among the worst offenders.

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