In addition to pointing the finger at the Federal Reserve, the Securities and Exchange Commission and the Office of the Comptroller of the Currency, the report notes that the nation’s five largest investment banks had only $1 in capital to cover every $40 or so in assets. That meant that a 3 percent drop in the value of the assets could have wiped them out, but this scary situation was hidden by bookkeeping that relied on devices such as derivatives and off-balance-sheet entries, the newspaper recounts.
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