JimBowie1958
Old Fogey
- Sep 25, 2011
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I have been looking for some statistics to see what the total derivatives for JP Morgan and BoA are, but I am guessing Bloomberg is fairly trustworty.
If so, this is an outragerous abuse of the FDIC insurance, and these banks have no right to put taxpayers in a position where we might owe $154 TRILLION bill fo bad derivative contracts on the part of these foolish banks.
HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades - Home - The Daily Bail
If so, this is an outragerous abuse of the FDIC insurance, and these banks have no right to put taxpayers in a position where we might owe $154 TRILLION bill fo bad derivative contracts on the part of these foolish banks.
HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades - Home - The Daily Bail
This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.
This means that the investment bank's European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.
This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.
What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.
This is a recipe for Armageddon. Bernanke is absolutely insane. No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks. His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began...
Bank of Americas holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.
That compares with JPMorgans deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firms $79 trillion of notional derivatives, the OCC data show.