sovereignman.com / Simon Black / September 16, 2016
Yesterday we talked about how the banking system is MUCH riskier than most people are led to believe.
And there is a growing chorus of high ranking regulators and officials saying the same thing, ranging from the Vice Chairman of the FDIC to former US Treasury Secretary Lawrence Summers.
I compared the banking system to airport security. As we discussed yesterday, airport security isn’t real security. It’s merely the illusion of security.
It’s the same in the financial system.
It’s not to say that banks are on the verge of collapse. But most of these new tough banking regulations are just smoke and mirrors designed to create the illusion of bank safety.
I’ll give you a few examples:
1. Bank “stress tests” are totally useless
As part of new financial regulation, the Federal Reserve conducts annual “stress tests” of US banks to determine whether or not they will be able to withstand a financial crisis.
These tests are totally useless.