What Kind of Trouble Can the Banks Stir Up?

“The banks will not get this country in trouble, I guarantee it. The capital ratios are huge, the excesses on the asset side have been largely cleared out.” — Warren Buffett, in a phone interview with Bloomberg about the amount of capital America’s lenders have raised, and what that means for the country.

I’m no Warren Buffett, but I do think it’s a mistake to guarantee that the banks won’t be able to get us in trouble. Recall last week’s Atlantic cover story that questions whether the banks are trustworthy:

Many of the biggest banks now stand accused of manipulating the world’s most popular benchmark interest rate, the London Interbank Offered Rate (LIBOR), which is used as a baseline to set interest rates for trillions of dollars of loans and investments. Barclays paid a large fine in June to avoid civil and criminal charges that could have been brought by U.S. and U.K. authorities. The Swiss giant UBS was reportedly close to a similar settlement as of this writing. Other major banks, including JPMorgan, Bank of America, and Deutsche Bank, are under civil or criminal investigation (or both), though no charges have yet been filed.

And these are things that have only come to the surface. Who knows what other things are lurking in the shadows.


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