Wells Fargo's $721.1 Billion in Uninsured Deposits

[Gunnar Larson]

https://wallstreetonparade.com/2023/03/congress-sweats-the-small-stuff-as-four-wall-street-mega-banks-have-a-combined-3-3-trillion-in-uninsured-deposits/


By Pam Martens and Russ Martens: March 30, 2023 ~

Bank Logos (Thumbnail)On Tuesday, Martin Gruenberg, the Chair of the
Federal Deposit Insurance Corporation (FDIC), the federal agency that
serves as both a bank regulator and the overseer of the federal insurance
program for U.S. bank deposits, testified before the Senate Banking
Committee. The dangers of U.S. banks holding large amounts of uninsured
deposits came up repeatedly in his testimony. For example, Gruenberg’s
written testimony included these details about the ongoing banking crisis:

“…on Friday, March 10, a number of institutions with large amounts of
uninsured deposits reported that depositors had begun to withdraw their
funds.”

And this:

“The FDIC estimates that the cost to the DIF [Deposit Insurance Fund] of
resolving SVB [Silicon Valley Bank] to be $20 billion. The FDIC estimates
the cost of resolving Signature Bank to be $2.5 billion. Of the estimated
loss amounts, approximately 88 percent, or $18 billion, is attributable to
the cost of covering uninsured deposits at SVB…”

Silicon Valley Bank and Signature Bank represented the second and third
largest bank failures, respectively, in U.S. history. (The largest was
Washington Mutual, which failed during the 2008 financial crisis.) But in
terms of the size of their deposits, we are talking about minnows compared
to the deposit exposure at the whale banks on Wall Street.

As of December 31, 2022, Silicon Valley Bank had $175 billion in deposits.
On the same date, Signature Bank held $88.6 billion in deposits. Now
compare that to the whales on Wall Street: As of December 31, 2022, this is
where deposits stood at the four largest banks in the U.S. – all of which
also have large risk exposure from their extensive trading operations on
Wall Street: (The data comes from federal regulatory filings known as “call
reports.”)

JPMorgan Chase Bank N.A. held $2.015 trillion in deposits in domestic
offices, of which $1.058 trillion were uninsured.

Bank of America held $1.9 trillion in deposits in domestic offices, of
which $909.26 billion were uninsured.

Wells Fargo held $1.4 trillion in deposits in domestic offices, of which
$721.1 billion were uninsured.

Citibank N.A. (parent, Citigroup) held $777 billion in deposits in domestic
offices, of which $598.2 billion was uninsured. But…wait for it…Citibank
also held a staggering $622.607 billion in deposits in foreign offices – of
which, potentially, nothing was insured according to current law and
rulemaking. That would bring total deposits at Citibank in both domestic
and foreign offices to $1.4 trillion with potentially only $178.8 billion
FDIC insured – or 13 percent. (We have sought clarification on this from
the FDIC and will update this article when we receive a response.)

The Deposit Insurance Fund (DIF) protects depositors in U.S.-based
federally-insured banks up to $250,000 per depositor, per bank. It is
funded primarily through quarterly assessments on insured banks.
Ultimately, “FDIC insurance is backed by the full faith and credit of the
United States government.” No one has ever lost a dime in an FDIC-protected
deposit in the U.S.

According to the FDIC, the Deposit Insurance Fund (DIF) held $128.2 billion
as of December 31, 2022 while the total of domestic deposits tallied up to
$17.7 trillion.

This would not be the first time that Citigroup’s Citibank has put a gun to
the taxpayers’ head with the reckless way it does business. Sheila Bair was
the Chair of the FDIC during the 2008 financial crisis. In her 2012 book,
Bull by the Horns, Bair makes an astonishing revelation about Citigroup.
Despite the trillions of dollars in revolving loans and capital infusions
used to prop up Citigroup during the 2007 to 2010 financial crisis, its
federally-insured commercial bank, Citibank, actually held only $125
billion in U.S. insured deposits according to Bair.

As it turns out, the bulk of Citibank’s deposits were foreign and a large
part of those deposits were not insured or had low insurance amounts. Had
this foreign money decided to run for the exits on fear of a Citigroup
collapse, the FDIC might have been looking at just a $125 billion problem
but the rest of the financial system was looking at $2 trillion on the
books of Citigroup, $1 trillion off the books of Citigroup, and trillions
of dollars of derivative counterparty agreements.

In her book, Bair shares her belief that Citigroup’s two main regulators,
John Dugan (a former bank lobbyist, who in the leadup to the financial
crisis in 2008 headed the Office of the Comptroller of the Currency, the
regulator of national banks) and Tim Geithner, then President of the
Federal Reserve Bank of New York, were not being forthright with the public
on Citigroup’s real condition.

Geithner failed up to become U.S. Treasury Secretary under President Obama.
Geithner is currently President of a Wall Street private equity firm,
Warburg Pincus. John Dugan is currently Chairman of the Board of Directors
of Citigroup. (You can’t make this stuff up.)
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