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What Makes Banks Fail?

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"Let’s try to sort the narratives from the facts," The Big Money reports. "Rogue trading, or even dumb trading, did not bring down American financial banks, just as it did not bring down Société. A common perception about the financial crash is that it was set in motion by bad bets on the roulette wheel of the mortgage-bond market at the now-defunct Lehman Bros. But this is not true. Lehman did lose a fortune, but it lost it mainly in the business of packaging (awful) bank loans into (even more awful) bonds that ultimately left it holding on to a huge portfolio of unsold and unsellable junk derivatives. Lehman's losses on proprietary trading—those risky operations that the administration's plan now seeks to curb—in its nightmarish second and third quarters of 2008 totaled less than a billion dollars, a small fraction of the total loss in its portfolio of holdings."
SOURCE:   The Big Money