Banks Must Adopt Blockchain, Or Become Obsolete

It might seem that,because of China’s e-yuan launch, governments around the world have been clamoring to get a digital version of their currency. The consensus is that a central bank digital currency (CDBC) will give the nation behind it 21st century economic advantages as well as the opportunity to blaze a trail into the blockchain wilderness.

Ever since cryptocurrencies swept the world in 2017, the discussion of what to do about their inner workings never went away. It was suggested that the accounting methods used by today’s banks are rendered “legacy” compared to what can be done with blockchain. Even now, with little in terms of official response past a crypto card and study promises, crypto transfers flourish. El Salvador made bitcoin an official medium of exchange, in other words, outsourcing the role of CDBC to a market-proven cryptocurrency. Ukraine recently joined the line-up of nations legalizing crypto.

And it looks like things might be staying this way for a while.

Top bankers giving crypto a second look

As reported by the Bank Administration Institute, banks might simply attempt to integrate the crypto market into their systems with a plug like ACH or Fedwire (the often-dismissed “legacy” payment services). It’s a way to speed things up and avoid disruption when things are getting out of hand, but in a good way.

Some banks outside of the top 10 in the U.S. have already made a good effort out of converting to a wholly blockchain system. But even after all this time, they still mostly offer U.S. dollar tokenization. That’s not quite the same as full-bore crypto adoption; more of a workaround intended to enable dollar transfers on blockchain without actually transacting in cryptocurrencies.

Perhaps this is the ideal way of going about things. A wholly decentralized financial market, plugs included. Maybe the future of DeFi is more about blockchain technologies than the cryptocurrencies that run on blockchains?

“Crypto is a challenge to traditional banking”

Still, Benoît Cœuré, head of the innovation hub at the Bank of International Settlements (BIS), sees the crypto market as a possible challenge to the banking system:

Decentralized finance (DeFi) platforms are challenging traditional financial intermediation. They all come with different regulatory questions, which need fast and consistent answers… But make no mistake: global stablecoins, DeFi platforms and big tech firms will challenge banks’ models regardless.

“Financial intermediation” means the middleman business. Specifically, Cœuré is telling banks they’re missing out on the market-making business. DeFi lets private individuals lend and borrow from one another without a single bank standing in the middle, taking its share of the profits.

He’s sounding a wake-up call: “Hey, stodgy old financial institutions! A bunch of early adopters are eating your lunch, and if you don’t get to the table soon there’ll be nothing left but crumbs!”

Cœuré goes on to praise CBDCs, stating that countries should work together on acquiring one. While he doesn’t tell us why, he does mention how CBDCs preserve today and lay the groundwork for tomorrow. It seems that Cœuré sees digitalization as a way of preventing a sovereign currency from getting out of hand.

For banking corporations, even the largest ones, what’s at stake is profit and market share.

For global central banks, what’s at stake is much larger. If they don’t move fast, they stand to lose control of their own economies. A CDBC offers all of the ease-of-use benefits of cryptocurrencies, and all the “benefits” of a national currency: legislation, regulation, control over interest rates and inflation. Cœuré is telling central banks what they need to do in order to stay relevant as institutions in an age of cryptocurrencies and decentralized blockchain-enabled smart contracts.

If digitalization is a necessary measure, that means things are already failing on other fronts. Cœure, too, notes that stablecoins just as stable as those we expect from governments are already here. One can purchase or own them on the independent market. While Cœure acknowledges that central banks seem unwilling to get into the “nitty-gritty”, the market has long moved past the point where the actions of one bank can have a serious negative effect.

Cœuré is announcing, loud and clear, that central banks must act. Cryptocurrencies aren’t going away, and they can’t be ignored any longer. They’re such a serious threat to economic control and authority that we need to see a FedCoin, a EuroCoin, a YenCoin and all the rest.

The alternative is to either outsource CBDC creation like El Salvador did, or simply to close up shop and brush off the résumés. Those are the choices facing banks today.

Krystal Ball: Democrat CAUGHT Bilking Taxpayers On Behalf Of Big Bank

Krystal Ball explains the changing dynamics of the Democratic party, from working class people to neoliberal elites.

XRP: Understanding the Asset and Clearing Misconceptions

Santiago Velez, co-founder & R&D division lead for Block Digital, joins Real Vision CEO Raoul Pal to discuss all aspects of XRP — the coin, its use cases and Ripple the company. Providing an in-depth breakdown of the XRP project, Velez covers common misconceptions and current real world use cases, explaining key differences between XRP and other top crypto projects such as Bitcoin and Ethereum. Filmed on November 19, 2020. Key Learnings: XRP has significant traction with various banking consortiums across the world, notably in Japan. XRP has its own specific use case and does not necessarily overlap with other blockchain assets’ use cases such as Bitcoin. Viewers of this video will leave understanding XRP’s specific use case and how this compares to other notable crypto projects.

‘Banking While Black’: How Cashing a Check Can Be a Minefield

Black customers risk being racially profiled on everyday visits to bank branches. Under federal laws, there is little recourse as long as the banks ultimately complete their transactions.

Clarice Middleton shook with fear as she stood on the sidewalk outside a Wells Fargo branch in Atlanta one December morning in 2018. Moments earlier, she had tried to cash a $200 check, only to be accused of fraud by three branch employees, who then called 911.

Ms. Middleton, who is black, remembers thinking: “I don’t want to die.”

For many black Americans, going to the bank can be a fraught experience. Something as simple as trying to cash a check or open a bank account can lead to suspicious employees summoning the police, causing anxiety and fear — and sometimes even physical danger — for the accused customers.

There is no data on how frequently the police are called on customers who are making legitimate everyday transactions. The phenomenon has its own social media hashtag: #BankingWhileBlack.

Most people who experience an episode of racial profiling don’t report it, lawyers say. Some find it easier to engage in private settlement negotiations. The few who sue — as Ms. Middleton did — are unlikely to win in court because of loopholes in the law. Now, the police killing of George Floyd in Minneapolis, which set off nationwide protests against systemic racism, is prompting more people to speak up.

Ms. Middleton had gone to the Wells Fargo branch in Druid Hills, a wealthy, mostly white neighborhood in Atlanta, to cash a refund for a security deposit from a real estate company that had an account with the bank. Three bank employees examined the check and her identification, but refused to look at the additional proof Ms. Middleton offered. They declared the check fraudulent, and one employee called the police, according to her lawsuit.

When an officer arrived, Ms. Middleton showed him her identification and the check stub. As a former bank teller, she knew that would be proof enough that her check was authentic. The officer left without taking action. The Wells Fargo employees asked Ms. Middleton whether she still wanted to cash the check.

“I said yes, because they had written all over the back of the check,” said Ms. Middleton, who sued Wells Fargo last year for racial discrimination and defamation and sought an unspecified amount of damages.

Mary Eshet, a Wells Fargo spokeswoman, said Ms. Middleton had begun yelling “abusive and profane language” at the employees when she saw her ID being scanned.

“Employees tried to address Ms. Middleton’s concerns by explaining our policies, but Ms. Middleton continued to yell profane language,” Ms Eshet said. “She was asked to leave the branch multiple times and refused, so our employees followed their processes to engage law enforcement.” She added that the bank “appreciates the sensitivities of engaging law enforcement and the importance of continually reviewing our training, policies and procedures.”

Ms. Middleton’s lawyer, Yechezkel Rodal, said her client had not used profanity. “Wells Fargo is in possession of the video surveillance showing exactly what happened in the branch that morning,” he said. “The video will not support Wells Fargo’s lies.”

Some incidents play out without the involvement of police or courts.

In March 2019, Jabari Bennett wanted to withdraw $6,400 in cash to buy a used Toyota Camry from a dealership in Wilmington, Del. He had just sold his house in Atlanta and moved to Wilmington to live with his mother. Having been a Wells Fargo customer for four years — he had around $70,000 in his account from the sale of his house — Mr. Bennett walked into a nearby branch expecting to be back at the dealership and in his Camry within minutes.

He came away empty-handed and reeling.

First, a teller refused to accept that he was the account holder, questioning his out-of-state driver’s license, he said — even though Mr. Bennett had informed the bank of his new address just two weeks earlier. Then, a branch manager told Mr. Bennett to leave. He left in disbelief, then returned to try to complete the transaction. This time, the manager threatened to call the police. Mr. Bennett left again.

The experience “made me feel like I was nothing,” Mr. Bennett said.

He abandoned the deal on the car. A week later, he moved all his money out of Wells Fargo and then hired Mr. Rodal, who had gained a reputation for representing black customers against the bank after the story of one of his clients went viral in 2018. Mr. Rodal sent Wells Fargo a letter, but negotiations stalled.

Mr. Bennett decided to share his story publicly in light of the recent protests: “I don’t want anybody else to go through what I went through.”

Ms. Eshet, the Wells Fargo spokeswoman, said that branch employees were trained to spot potential fraud, and that the bank had increased security protocols to thwart internet scams involving large transfers of money.

“In this instance, there were enough markers for our team to conduct extra diligence in order to protect the customer and the bank,” she said.

The protests also pushed Benndrick Watson into action.

Last spring, Mr. Watson was driven out of a Wells Fargo branch in Westchase, a wealthy neighborhood near Tampa, Fla., by what the branch manager described as a “slip of the tongue.”

Mr. Watson, who was already a bank customer with a personal checking account, went to the branch to open a business account for his law firm.

A banker did a corporate records search and found Mr. Watson’s other business, a record label. Mr. Watson tried to direct the employee to the records for his law firm instead.

Eventually, the branch manager got involved. He sat down across from Mr. Watson and watched him enter information, including his Social Security number, into a keypad.

Then, the man uttered the N-word.

”He just said it — clear as day, no mistake,” Mr. Watson said. “My jaw just dropped, I dropped the pen, there was silence, he kind of looked at me, I said: ‘Did you really just say that?’”

Mr. Watson said the man had immediately begun to protest, saying that he had not meant to use the word, and that he was deeply sorry. Mr. Watson did not buy it. He got up and left. The manager followed him to his car, apologizing profusely, and resigned from the bank shortly afterward.

“I felt like I had a knife in my gut,” Mr. Watson said. “It’s a sickening word.”

Mr. Watson turned to Mr. Rodal, who wrote to Wells Fargo seeking an apology. The bank’s regional president, Steve Schultz, responded. “It seems that the utterance of the offensive term was unintentional,” Mr. Schultz wrote, but said the bank had taken “corrective action” against the branch manager anyway, without providing details. Ms. Eshet of Wells Fargo said the manager was deemed ineligible for any job with the bank.

Mr. Watson sued Wells Fargo in federal court in Florida on June 4.

In a statement, Ms. Eshet said: “We deeply apologize to Mr. Watson. There’s no excuse for it, and while we took action to address the matter, it cannot undo what happened and how he felt. We are very sorry.”

The problem is hardly confined to Wells Fargo. Last June, Robyn Murphy, a public relations consultant in Maryland, took her 18-year-old son, Jason, to a Bank of America branch in Owings Mills, Md., to open a joint savings account. Ms. Murphy, a 20-year customer of the bank, said she was shocked when an employee refused to proceed after a computer program flagged her son’s Social Security number as fraudulent.

Ms. Murphy protested: Her son had his own checking account at the bank. His Social Security number had already been used there without issue. The Murphys are black. Mr. Murphy, his mother said, is 6-foot-9.

“For all I know, it’s fraud,” the employee told them. Ms. Murphy said he had asked them to come back with Mr. Murphy’s Social Security card. When Mr. Murphy stood up, the employee yelled: “Don’t get up!”

After Ms. Murphy contacted a senior vice president she knew at the bank, other officials apologized and offered to open the branch whenever it was convenient for the Murphys to return and complete the transaction — which they did.

“It weighed on us very heavily for a long time,” Ms. Murphy said.

“We understand the client did not feel she and her son were treated properly in this interaction with our team, and we regret that,” Bill Halldin, a Bank of America spokesman, said in an emailed statement. “These alerts are designed to protect our clients from fraud and misuse of their personal information.” He declined to comment on what, if any, action the bank had taken against the employee.

Banks say they reject racism of any sort. The country’s four largest banks by asset size, JPMorgan Chase, Wells Fargo, Bank of America and Citigroup, all require branch employees to complete annual diversity training, according to the banks’ representatives.

Still, banks have not managed to weed out discrimination. The New York Times reported in December that a JPMorgan Chase employee had described a customer as being “from Section 8” and therefore undeserving of service. The bank has since said it would seek to increase its sensitivity to issues surrounding race.

But little is mandated by law. The Civil Rights Act of 1964 lists specific businesses that may not treat black customers differently: movie theaters, hotels, restaurants, and performance and sports venues. Federal courts have held that because the law identifies the kinds of businesses to which it applies, those not on the list, such as banks, cannot be held to it. That loophole makes it hard for victims of racial profiling to win in court.

There is an additional limitation. In 1866, Congress created new laws to establish rights for black Americans, including one giving them the right to enter into agreements to buy goods or services and have those contracts enforced. Courts have since ruled that the law requires only that service be granted eventually.

In 2012, for instance, a federal appeals court ruled that a Hispanic man who had been turned away by a white cashier at a Target store in Florida did not have a case against Target because he was able to complete his purchases with a different cashier.

That could stymie Ms. Middleton’s case. Wells Fargo is arguing that because she was eventually able to cash her check, a judge should dismiss it.

Steve Eisman: “They mistook leverage for genius”

Steve Eisman: Quantitative Easing was a failure: it didn’t get corporations to borrow and invest. Rather, they borrowed and bought up their own stock.


Steve Eisman: Inequality was cause of Financial Crisis (10:17)


Steve Eisman: They made money because of their leverage (debt ratio) and they mistook their leverage for genius (12:19)


Steve Eisman was one of the few who predicted the 2008 financial crisis, and he made his name by foreseeing the collapse of subprime mortgage market.

Michael Lewis portrays him as one of the heroes in the bestselling book The Big Short and Steve Carrell plays an outspoken version of him in the Oscar-winning movie of the same name.

EFN:s Katrine Marçal meets Steve Eisman at Claridges hotel in London.


they’re all getting screwed you know you
know if they care about they care about
the ballgame or they care about what
actresses went into rehab I think you
should try medication no no we agreed if
it interferes with work you hate Wall
Street maybe it’s time to quit I love my
job you hate your job I love my job
you’re miserable I love my job I love my
job honey
mark Steve Iseman welcome to the offense
I’m glad to be here so you’ve been
portrayed in a book and in a film what
did you prefer I would say they were
both fairly accurate as the way I was
back then and let’s just leave it at
that okay okay so I’ve heard that some
Brad Pitt’s almost caladium in the film
it’s not true I got a phone call from
Adam McKay who was the author director
of the movie in November of 2015 to say
that he was writing the movie and that
there was a possibility that Brad Pitt
would play me to which I responded that
the only thing Brad Pitt and I have in
common is that we both have really good
hair okay
so being one a few people who sold the
financial crash coming how did it feel
to have see this big disaster unfold and
not being able to do anything about it
the analogy I use it’s a little bit like
Noah in the ark yeah so you know Noah’s
on the ark he’s okay and that he saved
his family but he’s not exactly happy
hearing everybody screaming outside
that’s was sort of my experience all
right did you think the financial market
potential market from the financial
sector would get back get back to
business and get back to some kind of
normal as quickly as it did no I didn’t
expect it would it would happen that
quickly you know a lot of that was the
fact that the government backstop the
system and once the become a backstop
the system it was what the financial
markets did come back but the banking
system has been changed so in the book
and the film it becomes very clear that
you’re you betting against the subprime
mortgage market is not
just a trade but it’s kind of a moral
crusade are you still on this moral
crusade I’m not because a lot has
you know dodd-frank I think really fixed
a lot of things leverage has come down
enormous ly the Consumer Financial
Protection Board has been put in place
to protect consumers I the world’s very
different from what it was pre-crisis
hmm but now many of these things are
threatening I mean Donald Trump has
promised to repeal vast parts of the
dodd-frank act for example it’s not
something I’m in favor of I think that
will be a big fight you know it’s
possible the industry is going to get
deregulated to a degree we’re not going
to go back to what we where it was so
for example you know Citigroup used to
be levered 35 to 1 today its levered 10
to 1 I feel if we go into some type of
deregulation maybe you get 2 to 3 turns
more leverage it’s not something that
I’m personally in favor of but I don’t
think it’s a calamity hmm so do you
think with Donald Trump be president
today if more than one banker had gone
to jail for the financial crisis it’s an
excellent question and the answer is I
don’t know you know I don’t know
I’m cold about it I’ve thought about it
a lot
I think there’s a definite very strong
sentiment that it was wrong that nobody
went to jail I’m not going to say if
that sentiment is right or not but
there’s definitely a very strong
sentiment in the country that that’s the
case and I think people are very angry
that nobody did go to jail again I’m not
going to say whether that’s right or
wrong and if people had gone to jail I
think that would have soothed some of
the hangar that was seen in the election
so it’s possible that impact of the
election but it’s impossible it’s
impossible to say right so now taxes are
going to be can’t and Finance regulators
because the populace to campaign against
Wall Street 1 correct correct okay so
what do you do with investment then I
hear you you are investing quite a lot
in bank stocks well I mean there’s
there’s two issues there’s what I think
about finance the financial system and
what I think about financial stocks and
the two don’t necessarily
correlate so with respect to the
financial system I think that what’s
been done has been a good thing but it’s
been very intense bank the dodd-frank
act and the Fed forcing people to
de-lever to de-risk etc so from a
financial system I’m very happy I could
say very strongly the United States
financial system has never been held
this healthy in my lifetime but it’s
been very painful for financial stocks
because as you de-lever and do risk you
make less money and therefore it hurts
your stock price so the last six years
or so have been extremely painful for
financial stocks especially banks as
they’ve de-levered and dearest well if
we’re going to go into world where we’re
going to deregulate and leverage is
going to go up at least some just
reverse the story
so therefore financial stocks should do
well right okay
like I said financial system financial
stocks but you are not necessarily the
same an interest rates in America are
going up yes that’s very good for banks
all right
so America is kind of moving from a
monetary stimulus to a fiscal stimulus
with something but it’s like that’s
something I’m in favor of yes I think
it’s a good thing the infrastructure
investment yeah that’s right until not
believe that quantitative easing is a
successful strategy why not there are
too many negative impacts for from it to
I mean look it was a noble experiment
there was no fiscal expansion there was
no other game in town so I don’t blame
the Fed for doing it the idea was that
lowering rates would cause people to go
up or out on the risk curve and vest in
the economy and really the other thing
happened was they went out on the risk
curve by buying back their own stock
they didn’t really invest in the economy
and with lower rates that hurts consumer
because they makes us money we pay the
money in the bank so I haven’t you know
when we started the monetary policy of
quantitative easing
us growth was one-and-a-half to two
percent and after we did it it’s one and
a half to two percent so in my view
quantitative easing is a failure
alright so in November you said to the
Guardian in Europe but Europe is screwed
you guys are still screwed referring to
their non-performing loans in the
Italian depends of the country yes
are we in Europe still screwed well my
wife wish I hadn’t said that
yes so okay oh we in big trouble not big
it depends on the country you know Italy
has a very large non-performing loan
problem I don’t see the Italian
government doing anything to really
solve that problem if they like before
Christmas that was a nasty suppose that
was just monte de Paz yeah and you never
like to say monte de Partie because it’s
such a great name and the world’s oldest
bank as the world’s oldest bank correct
and I don’t you know you could try and
Simmel to deposit ten times fast it’s
very hard but it’s not really solving
the problem I mean this is something
called a Texas ratio which is a ratio
that bank analyst Achon myself compute
which is non-performing loans divided by
tangible book value plus reserves
basically the numerators all the bad
stuff divided by the money you have to
pay for the bad stuff and one of the
great lessons about bank analysis is
that one in Texas ratio gets over a
hundred percent the bank is done and in
Italy the two largest banks are in paisa
and you credit and their Texas ratios
are at ninety percent and every other
Bank in Italy is over 100 percent so I
don’t envy Italy the problem ok famous
ahma is the country there’s the bigger
than I think it won’t come and I think
the problem with the banks generally in
Europe is that they are still under
capitalized and they they are they do
not make enough money per dollar
employed basically European banks don’t
charge enough for this
services they never have and they’ve
tried to make up the difference with
leverage and in a world where you have
to use less leverage that model doesn’t
what about Deutsche Bank quite the same
well don’t you make sort of the poster
child for that let’s think about this
this way so today if a bank has a 1%
return on asset and is loved or ten to
one the return on equity is 10% that’s
the simple formula so you know Citigroup
for example doesn’t even have a 1% ROA
but they’re not that far off but
Deutsche Bank today has a 30 basis point
ROA they need to improve their
profitability by more than three times
there’s no way Georgia Bank on its own
can improve its profitability three
times the entire European banking system
has to be price you know how that’s
going to ever happen I don’t know but
until it does your paint banks it could
be a problem
they’re going to be a problem so you’ve
been in here in London for a few hours
now and you must have realized already
that the only thing people talk about
here with breakfast yes
so what financial risks do you see
coming from brexit big question is a big
okay what will happen in March I have no
idea you have no I really have no idea
honestly I don’t think and more
importantly anybody else has any idea
that it’s going to be an adventure a not
so it’s going to be a fun adventure but
it’s going to be an adventure so you
said that we’re very bad at dealing with
crises that develop very slowly and you
put the blame on the big financial
crisis of 2007-2008 on income
distribution really do you see that
changing at all I mean let me explain
that yes because it’s not intuitively
obvious how the two are connected so you
know my thesis is that one of the
underlying causes of the financial
crisis it was bad income distribution so
you know when I say that people’s eyes
generally clays are like you know what
are you talking about
but I think that there’s a
cause-and-effect relationship in that
you know starting in the 90s when income
distribution started to get really poor
in the United States rather than focus
on that and what the solutions worth of
that problem let credit get democratized
that was the euphemism for will will
make loans to people that we didn’t make
loans to before so rather than get
people’s incomes up they let them lever
themselves [take out more debt] and one of the ways people
lever themselves was by taking out loans
on their homes and loving themselves
that way and so I think one of the
causes of the subprime mortgage crisis
is that you know post dodd-frank hard to
get a mortgage loan yeah you know
incomes have only started to start
growing again we’ll have to see what it
does the new administration can do
anything hmm
so it don’t Frank it’s harder to get a
loan but well it’s hard to get a
mortgage why although I don’t think that
I caused a defect of dodd-frank I think
it’s more of an effect of all the fines
that were imposed on the banks for the
mortgage crisis and so the banks I think
not unjustifiably are kind of worried
about making mortgage loans that they
might they might not should or should
not make so the financial crisis what he
said the main problem was the products
the tools available or the culture ah I
would say is one of the unsung aspects
of the financial crisis that people have
definitely not written that up about
which is psychology yes and what I mean
by psychology is you have an entire
generation of Wall Street executives who
grew up in the 90s in the early aughts
who really only had one experience which
is they made more money every single
year now what they didn’t really notice
was that as they were making more money
every single year the leverage of their
various institutions was increasing
every single year
now they thought they were making more
money because it was them but really
what was happening as they were making
more money because their institution was
becoming more levered and really what
happened was they mistook leverage for
I wrote that sentence by the way I read
that I do it’s a good son it’s a good
sentence I don’t write a lot of good
sentences but that’s definitely one of
them tweetable yes it’s very good right
if I tweeted I would tweet listen I am
so let’s imagine you went to a Wall
Street executive in circa 2006 and you
said to the CEO of you know pick the
name of your institution and you’d say
dude listen the entire paradigm of your
career is wrong you have to de-lever so
did you ever have a conversation like
that I did I’ve never told this story
before there’s like AI now it can be
told story okay um so the day is
February 2008 and I have a meeting with
the head of Risk Management and one of
the big Wall Street firms we won’t name
them anyone else today but it wouldn’t
matter because I would have had the same
it would have been the same conversation
with any of them
given what was discussion one so I sit
down with a head of risk management of
one of the big farms it’s one month
before Bear Stearns almost to the day
and I say to him you have got to de-lever
and you’ve got to de-lever now because
Armageddon is coming the point of it is
the direct that’s almost a direct quote
I used the word Armageddon and he looks
at me and he says you know I hear what
you’re saying but you know we at X we
can be much more levered to the bank now
back then there was a bank based in
Detroit called net city it was a
medium-sized regional bank and it had a
lot of subprime mortgages so it was a
bit of the topic of the day and so I
said to him you know do you know what
happens if knacks City goes down and he
says no what happens I said nothing the
regulator’s come in they seize the bank
they pay off the depositors they fix the
bank they sell the bank the government
takes something of a loss end of story
do you know what happens if your firm
goes down planet earth burns who should
be more levered and he looked at me like
I was speaking ancient Greek like he
just it was so outside his paradigm it’s
like he didn’t know I was talking about
and I realized it was over that there
was no way these guys were going to do
what needed to be done before the world
blew up but I think we’re going to see
someone to go to jail right
I mean you can have to break up the bank
partido I don’t know I don’t know I have
a feeling in a few years people are
going to be doing what they always do in
the economy tanks they would be blaming
immigrants and poor people it’s not X
equate from you is that Hollywood’s a
great quote it’s a great mark it’s not
yellow it was written by Adam McKay with
the author and director and but did you
think in those terms back then oh I
always think in those times always
thinks in terms of disaster yes why is
that just I have a very strange DNA do
you see this paradigm changing at all
this culture I was told check it steady
change they’ve been beaten to a pulp
you know the dodd-frank gave much more
power to the Fed to regulate the banks
that power was put in the hand of
Governor Daniel Tarullo and I think he’s
done a tremendous job of de-levering the
banks in the United States you know I
would say the CEOs of the bank’s fought
him kicking and screaming but I’d say in
the last year or two they gave up and I
know you said before that Europe’s done
not as good of a job with that that’s
correct why well it’s what your starting
point so you know just pre-crisis
Citigroup is levered thirty five to one
deutsche bank is lowered over 50 to one
so today’s Citigroup is levered ten to
one and deutsche bank depending on how
you calculate is probably levered twenty
five to one so everybody’s leverage is
lower European banks have always been
much more levered than US banks so
they’re still more levered they just
left levered than they were right not
they’re not de-levered enough to my taste
but that again we gets back to the Paula
Mills they’re not profitable enough per
dollar employed so the regulator’s in
Europe let them be more levered I think
it’s a mistake but that’s the way the
systems it works okay and everyone’s
asking you what the next one of the
crisis is going to be so I don’t have a
dick I know I’m not going to ask you
money I will ask you that question I say
you know everybody’s trying to pick the
next big short and I’ve done that
already I’m in no rush
okay thanks a lot Steve Eisman thank you