Significant Off-Sheet Holdings Spark Concerns of Echoes from the 2008 Financial Crisis
US Banks Conceal $7.4 Trillion Off-Sheet Holdings, Recalling 2008 Financial Meltdown
Financial experts and government agencies agree that the 2008 financial collapse highlighted hidden leverage in off-balance sheet entities at central Wall Street banks as a critical driver of the crisis.
- Large banks and thrifts maintained leverage ratios between 16:1 and 22:1 from 2000 to 2007.
- Some banks, like JPMorgan and Wells Fargo, were consistently high in leverage, while others, such as Bank of America and Citigroup, increased their leverage over time.
- Citigroup, in particular, held substantial off-balance sheet assets, contributing to a leverage ratio that could have reached 48:1 in 2007 if all assets were included.
Instead, most of these banks held their off-sheet balance unchanged, with the most notable example of Citigroup, which instead failed and received the largest bailout in the banking history by the US government, set at most of $306 billion losses.
The current state of banking, characterized by off-balance sheet liabilities reaching trillions of dollars, raises concerns about transparency and financial stability, with patterns emerging yet again.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.