The vice chairman of the U.S. Federal Deposit Insurance Corporation, Thomas Hoenig, reported in a mid-February interview that “U.S. banks are twice as big as they admit to being!”
This image was so stark that the Bloomberg News reporter who chronicled the interview likened Hoenig’s statement to the message that appears in the subtle warning on automobile side-view mirrors: “Objects are bigger than they appear”!
No one knows how this will all play out. For that, we will just have to wait and hope (and perhaps pray). We definitely know that Thomas Hoenig, whose access to all the “inside data” available to the FDIC (the very entity responsible for insuring bank deposits), is extremely concerned about the risks banks are carrying, making the situation considerably worse.
Hoenig knows that our banks are twice as big as they appear –because they’ve been given full permission to make $7 trillion totally invisible to all of us who “need to know”. It will be a travesty if Hoenig’s warnings are ignored and then, years later, become validated through some new banking crisis. If that happens, perhaps we need to replace toothless accounting boards with an “enlightened dictator” immune to lobbying pressure from banks. Then we would get the fully transparent, appropriate, and effective accounting and risk control standards we need and deserve!
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