Stock Value of U.S. Big Four Banks Is Crumbling, as Financial System Will Be Deeply Affected

Oct. 2, 2020 (EIRNS)—As of Sept. 30, the stock values of America’s big four banks—JPMorgan Chase, Bank of America, Wells Fargo and Citigroup— are in a free fall, year-to-date, by a range of 32 to 56%, indicating that despite their inflated profit reports and the frantically rising stock market, there is deep trouble at these banks.

The reason is that insiders of the City of London and Wall Street, and some investors, know that these banks hold worthless garbage on their books, and are at the fulcrum of a speculative financial system that is hopelessly bankrupt.

For example, Bank of America’s stock value is down 33% this year-to-date, and is back where it had first been in December 1996, some 24 years ago. Citigroup’s bank stock is down 46% year-to-date, and is back where it had been in 1993. The big four banks’ combined stock market capitalization is $685 billion, a fall of 46% from its peak in January 2018.

The difficulty is exemplified by the U.S. housing market. While pent-up demand has led to a build-up in home purchases in some areas (and among certain economic brackets), in other cases, households are far behind in paying their mortgages. The Federal Housing Administration, which insures about 8 million high-risk mortgages with lower reporting requirements, reports that an all-time record of 17.4% of its mortgages were delinquent in August. For example, in the New York City-Jersey City-White Plains metropolitan statistical area, 27% of all FHA insured loans are delinquent (30 days or more past due), and 20.6% are “seriously delinquent” (90 days or more past due): Three-quarters of those in delinquency are at least 90 days past due. Many of the underlying mortgages have been swept into “forbearance” programs, in which the homeowner is not required, during the COVID-19 pandemic, to pay principal or interest. But, clearly, at some point, they will be required to resume payments on their mortgages, on which interest charges have continued to accumulate, meaning the mortgage will either be extended or the monthly payments increased. Many won’t be able to make payments, because they don’t have jobs. The big four banks have significant exposure to home mortgages and the derivative instruments issued on top of them.