Dead Broke Banks are Doing Anything to Survive and They are Screwing People out of Billions of Dollars – Wall Street Underground

By Nick Guarino | July 28, 2008

By any reasonable measure of solvency, the world banking system is broke. There is a major campaign going on to hide just how broke they are.

The banks are in survival mode and that means they will screw their best and biggest clients to survive. GE capital did it when they dumped billions in bad debt on a European bank. Major banks are getting federal subpoenas for screwing clients in auction rate securities.

The Swiss mega-bank UBS is accused of defrauding its biggest clients out of billions, they fired their head trader. The banking system is paralyzed because no one trusts anyone else and rightly so. The most sophisticated players are getting burned on the bad debt the banks are desperate to unload. This is about survival.

The kid gloves have come off. If the best and brightest minds in international finance are getting screwed on bad debts, you can image how treacherous it is for the little guy. So far this year, 7 banks have failed.

Just this weekend another two were quietly closed by the FDIC. One bank saw 22 branches locked down. Before the fat lady sings, you’ll see hundreds of banks fail and among them the nation’s biggest. And as I keep saying, the government does not come close to having the sufficient cash to bail them out.

Someone somewhere has to take a loss. For now, insured accounts have been covered but people above the insurance limits are seeing their accounts frozen and learning that they will get nothing. Soon banks will be nationalized and ALL accounts will be frozen. That’s because the government simply cannot afford to pay the insurance on one major failure, let alone hundreds. The FDIC insurance fund is being drained very quickly and soon it, too, will be broke.

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