Friday, August 10, 2012

Banking collapse: Fed tells banks to prepare for worst case scenario

A super secret Federal Reserve program, by which they ordered the major U.S. banks to prepare a worst case scenario contingency plan in the advent of a collapse in the banking system, was made public on Aug 10.

U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.
The two-year-old program, which has been largely secret until now, is in addition to the "living wills" the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress. - Reuters

Courtesy of JP Morgan Chase
Perhaps it was due to the Federal Reserves secret plan that the American people were placed on the hook for hundreds of trillions of dollars worth of toxic assets, which JP Morgan Chase and Bank of America moved to their commercial balance sheets, allowing the FDIC and the taxpayer to be responsible for losses should they fail.


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