Major US banks masked risk levels
Major US banks temporarily lowered their debt levels just before reporting in the past five quarters, making it appear their balance sheets were less risky, according to data from the Federal Reserve Bank of New York. The Fed said on Friday 18 banks, including Goldman Sachs , Morgan Stanley, JP Morgan Chase, Bank of America and Citigroup, understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each period. The banks had increased their debt in the middle of successive quarters, it said. Excessive leverage by the banks was one of the causes that led to the global financial crisis in 2008.