In its crusade against money laundering and other financial crimes, the United States is peering into the corners of financial giants such as Bank of America, JPMorgan Chase and Citibank. Recently, their reports revealed worrying irregularities, putting the Biden administration on alert.
American finance: Billions of assets hidden by banks
These financial behemoths, although not engaged in the Bitcoin ETF frenzy, maintain a strong interest in the world of cryptocurrency. By carrying out investigations and analyses, or even issuing their own crypto-assets, they attract the attention of the authorities, opening a new chapter in the American financial regulation.
Billions of dollars, hidden in the shadows, escape the balance sheets of the giants of American finance. According to recent revelations of the United States government, JPMorgan Chase, Bank of America and Citibank unknown and potentially risky assetsout of sight of the general public.
The figures, taken from the meanderings of the Federal Financial Institutions Examination Council (FFIEC) and reported by Wall Street on Parade, are dizzying: JPMorgan Chase reportedly holds $3,227 billion off balance sheetwhile Bank of America and Citibank would shelter 1,600 and 2,600 billion respectively.
The Federal Reserve characterizes these off-balance sheet activities as “widely diverse,” encompassing a range of financial instruments, from loan contracts to options and derivative contracts. A common practice, certainly, but not unlike the excesses that led to the financial crisis of 2008.
Citigroup, in particular, stands out with mountains of off-balance sheet assets, widely used to juggling capital requirements. But history records that in 2008, Citigroup collapsed, calling for help in the largest bailouts in global banking history.
Banks angry over stricter capital requirements
Last July, the Federal Reserve proposed stricter rules on capital for banks, aimed at strengthening their balance sheets in the face of possible economic slowdowns. But the CEOs of America's biggest banks, including JPMorgan Chase, Wells Fargo and Bank of America, voiced their opposition at a Senate hearing in December.
Jamie Dimon, an anti-bitcoin (BTC) head of JPMorgan Chase, warned that these changes could harm the economy, limiting banks' ability to invest at crucial times. He said the proposed Basel III Endgame rule requirements would unjustifiably increase capital constraints by 20 to 25 percent for large banks, with negative impacts on U.S. markets and households.
A struggle between banking interests and security in terms of global finance is at stake.
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