Thursday, July 14, 2016

Derivatives: a continuing problem

Derivatives were a major cause of the Great Depression and will probably be the same with our next economic failure. The Office of the Comptroller of the Currency (OCC) has published a chart showing the 25 banks with the largest holdings of derivatives as of March 31, 2016.

You can see that the largest holders of derivatives are the TBTF banks. The leader is Citigroup with a total notional amount of derivatives of $55.6 trillion. If you add the four other mega Wall Street banks (JPMorgan Chase, Goldman Sachs, Bank of America and Morgan Stanley) yoiu wind up with $231.4 trillion in derivatives or 93 percent of all derivatives in the entire FDIC banking universe of 6,122 banks and savings associations.

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