muses of the moment

April 3, 2013

Mortgages-toxic securities

We all know that the TBTF banks have used legal (and, in gg’s humble opinion, illegal) creative accounting methods to hide their exposure to the toxic mortgage securities going back to the 2007 implosion which required massive over-the-counter and under-the-counter taxpayer bail outs.

Nothing has been fixed. In fact, banks have been using the system to put off legal responsibilities.

Click here.

Groovygirl got an email from a friend, and it looks like this systemic exposure is heating up again.

There are some clues out there if you are looking: click here for Goldman loss in the courts and click here for Freddie’s “miraculous” gain in 2012 (perhaps, not too consequently, they “lost” the same amount in 2011).

Again, gg would like to remind her readers that securities on the balance sheets of banks are just the trigger. It is the billions, perhaps trillions, in derivatives that are connected to the mortgage securities that bring down the system and stop credit markets dead, as they did in 2007-2009.

No one knows when this next crisis will hit, but the banks’ balance sheets are NOT fixed.

And with Cyprus, will the depositors “bail in” the TBTF banks next time?

Update: some preliminary online research on this issue has brought this to gg’s attention. Click here.

Side musing: pay attention to this issue! Research your own banks and brokerages and investments. You will have to look at the foot notes of the prospectus of the last 5 years to even get a hint of what is really on the balance sheet.


  1. GG,

    Would credit unions be a better place to put money in than a bank?

    Comment by MikePhila — April 3, 2013 @ 6:39 pm

  2. Credit Unions had the same funding issues as regular banks in 2008 when the money market funds had all the liquidity sucked out of them, although it was not the focus of financial TV at the time.

    However, it would be good, in gg’s opinion, to have one of your three banks that you are spreading your savings over be a credit union.


    Comment by totallygroovygirlfriday — April 4, 2013 @ 10:46 am

  3. […] Remember this post from groovygirl? Click here. […]

    Pingback by Forced Loans | muses of the moment — April 19, 2013 @ 7:09 pm

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