Banks not to bank on

The Other I

I was dumbfounded to learn earlier today that the  U.S budget bill passed by the U.S. Congress several weeks ago managed to sneak in a provision that would once again bail out banks that are “too-big-to-fail” if they get into trouble.  But this time, if Citi or Chase or any of the other big investment banks face insolvency, they will be permitted to take their depositors’ cash in savings accounts and CDs and replace with them a bank stock certificate — which may, of course, be of dubious value.  This applies even to deposits that are FDIC insured.

That’s bad enough.  But I also learned that banks may once again be on the edge of the same kind of disaster that floored them in 2008.

Deutsche Bank thinks that the falling oil price could trigger a huge wave of defaults because banks have lent so much money – more than a trillion dollars…

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