Posted on April 27th, 2008 in Daily Stock Market / Economic News - The Real Story
Well, isn’t this cute. While spewing ‘de-leveraging’ every chance they get, apparently the big banks are levering up faster than ever before. FT.com reports that “according to Tim Bond of Barclays Capital, in the months to the end of February assets held by US banks rose by $960bn but deposits rose by only $293bn (£147.7bn), leaving a record gap of $667bn.”
The very same banks that have all said the financial system’s problems are due to the massive leverage and lack of capital are back on the crack pipe and in rare form. This story is infuriating but just goes to show the peril in which the banks have put themselves. “But what about the rest of us?” is right.
Let’s hope this return to ‘abnormality’ brings some long needed liquidity to the US mortgage market. This is likely wishful thinking on my part, however, because big banks need to clean up their own house before they can worry about anyone elses house (no pun intended)…and cleaning up their house could take a long, long time.- Best, Mr Mortgage
Source: Relief on Wall Street Unlikely to Bring Universal Joy By Tony Jackson