Just under a year ago, when looking at aggregate loan creation by America's banks, we stumbled upon something strange: there was a massive discrepancy between what the Fed, in its weekly call reports, said was weekly US loan issuance - which the then bulls gloatingly announced was rising and thus a confirmation of US growth - and what the actual banks reported.
This is what we reported:
One of the more bullish "fundamental" theses discussed in recent weeks, perhaps as an offset to the documented record collapse in mortgage origination - because without debt creation by commercial banks one can kiss this, or any recovery, goodbye - has been the so-called surge in loans and leases as reported weekly by the Fed in its H.8 statement. Some, such as the chief strategist of retail brokerage Charles Schwab, Liz Ann Sonders, went so far as to note that this is, to her, the "most important chart in the world."
[S]ince the Fed's data is sourced by the banks themselves, what the Fed is representing and what the banks report quarterly should be in rough alignment. Unfortunately it isn't.
As the chart [above] shows, in the first quarter, of the Big 4 banks, only Wells Fargo reported an increase - a tiny $4 billion to be exact - in its loans and leases portfolio. All the other banks... saw a decline in their loans and leases holdings.
Our question then: "is the Fed fabricating loan level data?"
Fast forward one year when none other than Bank of America, in not quite as explicit language, reveals a chart and a question mark, which is essentially a carbon copy of what Zero Hedge asked one year ago.
Because as the chart below shows, there very dramatic, and very glaring discrepancy between what BofA started experiencing one year ago (when we first noted it) when it comes to loan creation, and what the Fed represents every Friday in its weekly H.8 statement, has never been greater!
So back to the original question - just whose data is accurate: the bank making the loans or the bank's regulator whose only job is to promote confidence, even if it means openly fabricating data?