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96% of Credit Derivative Risk Held by 5 Banks
Washington’s Blog
Tuesday, July 28, 2009
Fitch’s has found that JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives:
About 80% of the derivative assets and liabilities carried on the balance sheets of 100 companies reviewed by Fitch were held by five banks: JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley.
Those five banks also account for more than 96% of the companies’ exposure to credit derivatives.
As Newsweek wrote in April:
Major Wall Street players are digging in against fundamental changes…At issue is whether trading in credit default swaps and other derivatives—and the giant, too-big-to-fail firms that traded them—will be allowed to dominate the financial landscape again once the crisis passes. As things look now, that is likely to happen…
Geithner’s new rules would allow the over-the-counter market to boom again, orchestrated by global giants that will continue to be “too big to fail” (they may have to be rescued again someday, in other words). And most of it will still occur largely out of sight of regulated exchanges…The old culture is reasserting itself with a vengeance. All of which runs up against the advice now being dispensed by many of the experts who were most prescient about the crash and its causes—the outsiders, in other words, as opposed to the insiders who are still running the show.
Newsweek was right. The same giants – JP Morgan, B of A, and Citigroup – are dominating the CDS market.
When I last looked at this issue, JP Morgan, B of A, and Citigroup were still the top 3 holders of derivatives in general, as well as credit derivatives.
But Goldman and Morgan weren’t even on the list (granted, Wachovia has since gone bust and been purchased by a bigger bank, Wells Fargo. But Wells isn’t in the top 5).
Given that Goldman bought $20 billion of credit default swaps from AIG in 2005 alone, and that Goldman received $13 billion and Morgan $1 billion from the AIG bailout, why weren’t Goldman and Morgan on the earlier list?
It might simply be that Fitch’s new list is not limited to any certain type of company, but includes all derivatives holders. Or it might be because Goldman and Morgan became “bank holding companies” since the list was published, and their new status made them subject to inclusion in Fitch’s new list. Or it may be because Goldman and Morgan hid the data.
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13 Responses to “96% of Credit Derivative Risk Held by 5 Banks”
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July 28th, 2009 at 4:50 am
Wait till citigroup collapses, and all of the loans retailers use to get cash up front, are gone and RETAIL collapses. Should be a fun, interesting ride, that I doubt even Wally World would be able to survive without a huge price increase to help increase their liquidity. CIt is a commercial lender and a factor firm. What’s factoring? Factoring is where CIT purchases a supplies company accounts receivable, and guarantees that if the buyer goes bust, they will pay the supplier. This could be quite interesting.
Watch this goobers video…
http://www.youtube.com/watch?v=Qvu0SdOUlrA
July 28th, 2009 at 6:55 am
That is excellent news. I am happier than I was when I got up. It’s gonna be a beautiful day. The sun is out -the birds are singing. I got a real positive feeling today.
July 28th, 2009 at 8:44 am
> “Fitch’s has found that JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives”
That is why I’ve been saying all along that the *only* way to solve the banker-engineered economic crisis is for millions of Americans to join forces in a non-partisan, cross-ideological coalition to exert aggressive, non-stop, round-the-clock pressure on Congress to simultaneously:
* put all derivatives-infected mega-banks through Chapter 11 bankruptcy and, in the reorganization proceedings, legally void all of their derivatives contracts;
* liquidate all of the ill-gotten assets of criminal scam artists such as Henry Paulson and Bernard Madoff, and use the resultant proceeds to help replenish whatever retirement funds they raided; and
* replace our current debt-based money system with a debt-free “Greenback” money system, whereby all new money — instead of being *loaned* into circulation at interest — is *spent* into circulation at *no* interest to fund the production and repair of public goods everyone can see and benefit from (roads & bridges, maglev rail, etc.), and at a rate pegged by law to objective criteria such as population growth and the general price level.
More on this at: http://propagandamatrix.com/fo.....012.0.html
Glen Reply:
July 28th, 2009 at 1:46 pm
YES
Audit the Fed
Meat the Banker Scum
Force gold or actual asset backing of all currencies.
Geolibertarian Reply:
July 28th, 2009 at 2:41 pm
Sorry, but I could not disagree more on instituting a gold-backed currency, and here’s why:
http://www.youtube.com/view_pl.....CCD8684C7F
FiatMoneyDestroyedUS Reply:
July 28th, 2009 at 8:29 pm
You’re an idiot.
FiatMoneyDestroyedUS Reply:
July 28th, 2009 at 8:57 pm
Your display of ignorance is a good example of why this nation is in the shape it is in today.
July 28th, 2009 at 2:57 pm
We should go after the clowns running this mess. Strip their wealth and kick them out of the country. Then render the remnanats of their dirty dealing’s null and void.
July 28th, 2009 at 7:46 pm
I could be wrong, but most, if not all of these banks are part of the Federal Reserve. I can’t find any info, although I do remember reading it. That’s a conflict of interest and reason for removal from the FED. Toss them out and then audit their books after they have lost their protection.
July 28th, 2009 at 8:06 pm
Yeah right. The banker pirates are buying time until they figure out a ploy to transfer the costs to us. Business as usual.
July 28th, 2009 at 8:53 pm
yeah we need a change in mindset for everyone.
July 29th, 2009 at 2:18 am
Your display of ignorance is a good example of why this nation is in the shape it is in today.
BTW I love your blog!
July 29th, 2009 at 3:39 am
@ FiatMoneyDestroyedUS: You’re obviously yet another brainwashed, insult-spewing Austrian School cultist, so I’ll gladly let readers examine the following and decide for themselves who the real “idiot” is here.
http://propagandamatrix.com/fo.....084.0.html