JP Morgan Chase, Bank of America and Citibank hold trillions of dollars of unknown potentially risky assets on their balance sheets, new US government data shows.
According to new data compiled by the Federal Financial Institutions Examination Council (FFIEC) and first published by Wall Street on Parade, JP Morgan Chase has $3.227 trillion, Bank of America has $1.6 trillion, and Citibank has $2.6 trillion in off-balance sheet assets. holdings. holdings.
The Federal Reserve defines off-balance sheet activity as "highly diverse in nature" and includes instruments such as firm credit transactions, standby letters of credit, foreign exchange transactions, financial futures, forward contracts, options, interest rate swaps, and other derivatives.
Off-balance sheet accounting has been a common practice in banking for years and, as Wall Street on Parade notes, played a key role in the 2008 financial crisis.
Of course, Citigroup collapsed in 2008 and received the largest bailout in world banking history; by March 2009, Citigroup shares were trading at 99 cents.
Last July, the U. S. Federal Reserve announced a proposal to raise capital adequacy requirements for banks to shore up their balance sheets during the economic downturn.
Executives from JP Morgan Chase, Wells Fargo, Bank of America, Citigroup, Morgan Stanley, Goldman Sachs, BNY Mellon and State Street opposed the proposed changes at a Senate Banking Oversight Committee hearing in December.
In a prepared statement, JP Morgan Chase CEO Jamie Dimon said the changes would hurt the banking industry and the broader economy.
Despite the lack of evidence that large U. S. banks are undercapitalized today, the proposed final Basel III regulations, if adopted, would unreasonably and unnecessarily increase capital requirements for the largest banks by 20-25%. "
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