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US banks create 10,000 units to reduce state control – study

Published time: July 23, 2012 14:58
Edited time: July 23, 2012 18:58
AFP Photo/Stan Honda

US major banks such as JP Morgan Chase, Citibank Group and Bank of America spawned more than 10,000 subsidiaries in the past 22 years, using legal structures to reduce taxes and avoid tighter regulation, a Federal Reserve study revealed.

­JP Morgan Chase, the largest US lender, has 3,391, as it extended, followed by Goldman Sachs, Morgan Stanley and Bank of America Corp. with more than 2,000 each, according to the study.

The assets of the largest lenders have since tripled to $15 trillion since 1999, when the Depression-era Glass-Steagall Act separating investment and commercial banking was abolished. As banks got bigger, their structure become more complicated making it difficult to mange and control, the report concluded.

For example, Morgan Stanley and Goldman Sachs, which focus on investment banking, have thousands of subsidiaries which provide commercial and consumer loans. Both institutions changed their legal status to bank holding companies during the financial crisis in 2008 to get access to Fed bailout funds.

Earlier this month the world’s major banks submitted so-called “living wills” – plans for quick liquidation in an emergency without hurting the nation’s economy. Banking majors are required to give the government the tools to wind them down in a case of a failure under provisions of the Dodd-Frank financial reform law designed to end the practice of bailing out “too big to fail” banks by the state.

Comments (3)

Maynard 26.07.2012 20:35

Read the history! Southern states seceded, usA became defunct! Abe Lincoln became military dictator using international maritime law ((admiralty law-Law of the Sea - see recent law of the sea treaties)). The attorns (property lawyers) who were not allowed to represent anyone in any court in America realized that the usA (being defunct) was uninhabited and so they 'incorporated' Washington D.C., in 1871, with the fiction (fictitious entity/realm (embodiment)) named UNITED STATES. U.S. is not a common law constituted union of republics, it is a corporation!  

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CORPORATE CITIZEN MACHINATIONS (unregistered) 26.07.2012 13:31

All corporations do it, thanks to their highly paid corporate lawyers and accountants. If there's a regulation, tax, and/or law that can be avoided, they will do it. Corrupt politicians and governments let them get away with it in exchange for campaign bribes (aka contributions). Don't expect to see any laws to close loopholes (do American politicians block themselves from insider trading?). The US government is not a democracy; It does NOT represent the people or the nations' greater interests. The US is ruled by a corrupt oligarchy as a fascist entity whereby corporations and government are effectively indistinguishable. Offshoring is another widespread corporate gambit used to evade responsibility. Organised crime has the same playbook as corporations, and that of course is no coincidence. All in the family.

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American Patriot (unregistered) 23.07.2012 20:02

Oh I was wondering why there were all these recent "no-name" banks in my local area. I see banks like PNC, TD Bank, 5/3rd Bank, and some other "nameless" banks.

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