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New Law Would Make Taxpayers Potentially Liable For TRILLIONS In Derivatives Losses
By Michael Snyder, on December 7th, 2014
    


"......According to multiple Democratic sources, banks are pushing hard to include the controversial provision (to make FDIC responsible for banks losses on derivatives in funding legislation that would keep the government operating after Dec. 11. Top negotiators in the House are taking the derivatives provision seriously, and may include it in the final bill, the sources said.

Sadly, most Americans don’t understand how derivatives work and so there is very little public outrage.

But the truth is that people should be marching in the streets over this.  If this provision becomes law, the American people could potentially be on the hook for absolutely massive losses…

The bank perks are not a traditional budget item. They would allow financial institutions to trade certain financial derivatives from subsidiaries that are insured by the Federal Deposit Insurance Corp. — potentially putting taxpayers on the hook for losses caused by the risky contracts.

This is not the first time these banks have tried to pull off such a coup.....
...........................................................................................

But that is the thing with bank lobbyists.  They are like Terminators – they never, ever, ever give up.

And they now have more of a sense of urgency then ever, because we are moving into a period of time when the big banks may begin losing tremendous amounts of money on derivatives contracts.

                                ....................................................................
And commodity derivatives are just part of the story.  Over the past couple of decades, Wall Street has been transformed into the largest casino in the history of the world.  At this point, the amounts of money that these “too big to fail” banks are potentially on the hook for are absolutely mind blowing.

As you read this, there are five Wall Street banks that each have more than 40 trillion dollars in exposure to derivatives.  The following numbers come from the OCC’s most recent quarterly report (see Table 2)…

JPMorgan Chase

Total Assets: $2,520,336,000,000 (about 2.5 trillion dollars)

Total Exposure To Derivatives: $68,326,075,000,000 (more than 68 trillion dollars)

Citibank

Total Assets: $1,909,715,000,000 (slightly more than 1.9 trillion dollars)

Total Exposure To Derivatives: $61,753,462,000,000 (more than 61 trillion dollars)

Goldman Sachs

Total Assets: $860,008,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $57,695,156,000,000 (more than 57 trillion dollars)

Bank Of America

Total Assets: $2,172,001,000,000 (a bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $55,472,434,000,000 (more than 55 trillion dollars)

Morgan Stanley

Total Assets: $826,568,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $44,134,518,000,000 (more than 44 trillion dollars)

......................................................

Do you want to be on the hook for all of that?

New Law Would Make Taxpayers Potentially Liable For TRILLIONS In Derivatives Losses

Comments

( 2 comments — Leave a comment )
amaebi
Dec. 9th, 2014 11:34 am (UTC)
Oh, for the love of the fishies of the sea. :/
bobby1933
Dec. 9th, 2014 04:06 pm (UTC)
So much financial activity feels like "tulip mania" to my autistic brain that i have a hard time distinguishing economic wisdom from a fevered imagination. This sounded important to me given the recent recession. At least tulip bulbs are tangible.
( 2 comments — Leave a comment )

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