Daily News: February 20, 2013

Bloomberg: Banks in U.S. Bigger Than They Appear


Bloomberg noted in an article that if the FDIC has its way and applies stricter accounting standards for derivatives and off-balance-sheet assets it would make the banks twice as big as they say they are — or about the size of the U.S. economy.

Bloomberg said that U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books. That can underestimate the risks firms face and affect how much capital they need.

Bloomberg added that using international standards for derivatives and consolidating mortgage securitizations, JPMorgan Chase, Bank of America and Wells Fargo would double in assets, while Citigroup would jump 60%, third- quarter data show. JPMorgan would swell to $4.5 trillion from $2.3 trillion, leapfrogging HSBC Holdings and Deutsche Bank, each with about $2.7 trillion.

To read the Bloomberg story click here.