Wall Street and our Federal Reserve have abandoned rationality!

Discussion in 'Stock Market' started by option4assets, Oct 23, 2011.

  1. option4assets

    option4assets Rookie

    Oct 17, 2011
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    So what we see happening now is this little blurb out of Bloomberg...

    Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

    Okay you say.. what's so bad about that? Ahh the plot thickens. Merril's derivative unit is loaded to the gills with tens of billions worth of exposure to European nightmares. If European banks were to start failing and defaulting, Merrill's people would be on the hook for an amount that couldn't possibly be covered. So, Bank of America has quietly moved these holdings to it's depositary arm of the bank, yes, the arm that is COVERED BY FDIC INSURANCE. Yes you read that right. Not only that, apparently JP Morgan is doing the same exact thing with somewhere north of 79 TRILLION worth of derivatives. Are you getting
    these numbers? Trillions folks.

    Now the FDIC who would be on the hook for all this, and who is already broke beyond repair is saying "this isn't right you can't take speculative junk and put it in the deposit arm of the bank that is insured". Well guess who's fighting them? The Federal Reserve! Yes check this, also from Bloomberg...

    The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people.

    So what's the take away here? The bottom line is that Wall Street and our Federal Reserve have abandoned any and all things you could consider rational, and decided that they should be absolved of their risk taking by placing the mess right on YOU.

    This is so outrageous, I cannot believe it is not on every single talking head channel on TV. Yet, not a peep. Not a word.

    Nothing. It's like it's not happening...!!!!

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