Wait . . . what? There’s $5 trillion in corporate loans which are “off balance sheet” and not properly accounted for?

Photo above - Alec Baldwin asks Mark Wahlberg "qui bono?" (who benefits) after a small time hoodlum was found executed in the 2006 film The Departed.

This story so far: First Brands Group – a car parts supplier – was caught with $2 billion in accounting fraud and opaque off balance sheet loans, despite having supposedly passed years of rigorous audits. FBG is now entering bankruptcy with no plan to exit. First Brands won’t matter to you unless your car uses oil filters, spark plugs, brake pads, etc. They are the industry leader for those products.

Jumping to today’s breaking news – there may be as much as $4.5 TRILLION in similar off-balance sheet items weighing down corporations in the US, Canada, and Europe. Nobody knows the exact amount for sure. See link below.

Jamie Dimon – CEO of Wall Street bank JPM Morgan Chase – foretold additional problems. Upon hearing about the looming shortage of oil filters he quipped “when you see one cockroach, there are probably more.” Independent experts have already pegged JPMorgan Chase’s own “off balance sheet” items at trillions. So Dimon should know about this stuff, eh? (see 2nd link below).

Ok, everybody is screaming “It’s gonna be 1929 all over again”. No need to do that here since there so many other places you can read it. How about “It’s gonna be worse than 2008!” when normal mortgage loans which WERE properly accounted for? Those mortgages nearly caused the collapse of then entire US banking system. The FDIC and Federal Reserve and Treasury department stepped in with wheelbarrow loads of taxpayer cash. And here we are today, setting new stock market records, on a daily basis.

As we can see from the US Government shutdown – now predicted to last until Thanksgiving - neither party is in a frame of mind to raise taxes or bail out corporate America. The tax and bailout thing will certainly change if people suddenly can’t get money from the ATM, or their 401K accounts get a giant haircut. Congress will do whatever it takes to get re-elected in 2026.

Okay, this is a long rant, so I’ll cut to the chase: In previous columns I’ve asked “qui bono” (who benefits) from loans and assets which are hidden in a dark cave, invisible to Generally Accepted Accounting Procedures? Certainly not you or me. Not government regulators. In fact, off balance sheet transactions are the entire strategy to evade regulator and investor disclosure. Cave dwelling corporate assets only exist because senators and house members who actually know about this stuff have received big campaign contributions. Somebody is making those contributions and wants to keep this stuff loosely regulated. Congress has also signed up for bad accounting and loose regulation of crypto currencies.

Most folks don’t change their own oil filters or spark plugs any more. Higher prices at Jiffy Lube will be blamed on “inflation” or “tariffs” rather than accounting fraud.

And that’s probably the way career politicians want it.

I’m just sayin’ . . .

World’s banking system risks a $4.5tn shock from the shadows

Wall Street’s Megabanks Have Trillions of Dollars Off-Balance Sheet, in a Replay of Accounting Hubris that Led to the 2008 Wall Street Collapse