US Deposits In Perspective: $25 Billion In Insurance, $9,283 Billion In Deposits; $297,514 Billion In Derivatives

Tyler Durden's picture

Earlier today, the American Banking Association reminded Americans that there is absolutely nothing to worry about when it comes to the sanctity of US deposits: after all there is a whopping $25 billion in the FDIC insurance fund which means "insured depositors are safe and their deposits are protected by a strong FDIC fund....The FDIC insurance fund has over $25 billion in reserves and the banking industry " Obviously supposedly "insured" depositors in Cyprus also though there was nothing to worry about, until they woke up on Saturday with a haircut between 6.75% and 9.9% on their money in the bank. Sadly, it may be the case that the ABA is being just modestly disingenuous in its statement. Why? Instead of explaining it in detail, here is a snapshot that does more than thousands of words ever could.

Chart drawn to scale.

The $25 billion in touted deposit insurance is supposed to preserve and protect (granted not in their entirety) some $9,283 billion in total US deposits. A far bigger problem, however, is when one considers the "asset" side of the US banks' ledger: remember deposits are unsecured liabilities. And for US banks, sadly, over the counter derivatives represent the vast majority of "off the books" assets. According to the latest OCC quarterly report, the total derivative notional outstanding of the Top 25 holding companies is $297,514 billion, or nearly $300 trillion. In other words there are 32 times more notional derivatives than there are total deposits, while the ratio of gross derivatives to deposit insurance is a concerning 11,900-to-1.

And with that, we hand it back to the ABA to comfort all US depositors that Cyprus could never possibly happen in the US.

Source: OCC, H.8

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Reptil's picture

hahahahahaha

 

ar01's picture

I'm going to be honest here: I never knew the numbers were that bad.. $25bn insurance on $9.2tn in deposits... that's a 0.27% (yes, less than 1%) coverage... 

MillionDollarBonus_'s picture

Honest question: If the government can't levy bank accounts to protect the integrity of the banking system, what do you think would happen to savers in the event of a bank run? Are you people also against the FDIC?

camaro68ss's picture

Your whole collectivism mentality makes me sick

Pladizow's picture

 

From my earlier post: Tue, 03/19/2013 - 10:04 | 3346646

 

FDIC:

 

And further, as we have at least 1 cent in reserve for every dollar of deposits we insure, there's nothing to worry about!

And if we happen to fail we can go to the Treasury.

And if the Treasury needs money they can go to the FED.

And circle jerk complete!

 

hedgeless_horseman's picture

 

 

"We also have the ability to borrow from Treasury.  Indeed we have the ability to immediately access up to $500 Billion from our Treasury line..."

Printing press, bitchezz.  Get one.

Pladizow's picture

Does the FDIC protect against theft by the bank holding the deposits or by the government!

hedgeless_horseman's picture

 

 

No, nor does it protect against The Inflation Tax.

chunga's picture

I'm almost afraid to click that youtube link.

notbot's picture

At which bank is the FDIC's $25bn being custodied?  JPM's CIO group, I suppose?

eclectic syncretist's picture

Maybe it's time to start banking at the local pawn shop.  They only charge 1% to cash a check.  I haven't done the math, but it might make more sense to do that than accept all the banking fees.

TheFourthStooge-ing's picture

Where's the problem? There's no problem here unless someone starts doing math.

Algebra is the enemy here, and I think we all know why.

The word algebra comes from the Arabic language (al-jabr: restoration).

Strike one.

Muhammad ibn Musa al-Khwarizmi, a major contributor to the establishment of algebra as a mathematical discipline, was Iranian (Persian).

Strike two.

Many of algebra's methods came from Arabic/Islamic mathematics.

Strike three.

It is plain to see that algebra is a terrorist conspiracy that is out to get all Americans.

Still have doubts? Look again at the word al-jabr, or restoration. What is being restored? A worldwide, global Islamic caliphate to cover the whole planet!!!1!

Americans must steadfastly embrace their natural loathing for mathematics, as this is the only thing which will protect our way of life and our precious bodily fluids.

SafelyGraze's picture

fortunately, the $297,514 billion is just a notional amount that all nets to zero.

as far as the $25B insuring $9283B in liabilities, that's more than 0.26 percent.

which more than offsets the thousand-to-one risk of system failure

and when you look at the insurance industry overall, the picture is very reassuring.

nearly 90 percent of *their* assets are in bonds (corporate, municipal, treasuiry), common stock, and mortgages. the values of which can only go up.

http://www.naic.org/capital_markets_archive/110819.htm

if depositors need to deeply tap fdic because of bank failure (resulting from, say, cities in michigan being unable to pay their debts), it is reassuring to know that the insurance is back-stopped by bonds issued by, and property located in, those same cities, and by stocks invested in those same banks.

anti-hedging!

 

ParkAveFlasher's picture

I love "net".  "Net" is my friend.  If I bet that apples will rise in price, I will hedge with oranges with an offsetting bet.

I need not regard bananas, grapefruits, pears, berries, and mangos in any equation, as they are not actually fruit.

Where's my nobel prize?

lolmao500's picture

the values of which can only go up.

Are you on drugs? When there's a panic, people will withdraw deposits + your ``assets`` will crash... all of them.

merizobeach's picture

"I'm almost afraid to click that youtube link."

Don't worry: it's such mindless babble that you won't listen to its entirety.

prains's picture

That my friends is the 18 inch red dildo of pain

ParkAveFlasher's picture

I kinda liked the misspelling.  It had a Ned Flanders-like "did-lee-O" twist to it.

Banksters's picture

 

Bankers are parasites.  Whether charging usurious interest rates(off of money created from nothing!),  devaluing currencies, or seizing savings, the result is the same: THEFT OF LAND, LABOR, RESOURCES AND LIBERTIES.

Revolt now or pay later, citizens of the world.

 

Chupacabra-322's picture

@ Banksters,

Fuck that,

 

at this point. Pac a Gun and pay no Income Tax. 

 

Aaron Russo's Documentary ''America Freedom To Fascism'' Dir cut. http://www.youtube.com/watch?v=ZKeaw7HPG04
Bogdog's picture

For every tilt of her head, I detect a lie.

merizobeach's picture

Was that about two tilts per sentence?

TheSilverJournal's picture

It's very scary to see that most people still actually believe the FDIC has the ability to insure their deposits. In fact, most people will be mentally destroyed when they learn what a fool they were for believing their wealth is safe in the banks and a green piece of paper and digital code in their bank account are reliable stores of wealth. For them to accept reality, they first have to admit their own follies. When someone becomes so tied up in the lie, they often support the lie so as not to appear as though they were taken. Never underestimate the power of denial.

EscapeKey's picture

Far more scary is that in the event of collapse, MF Global showed us that deposits rank BELOW derivatives, hence all depositors will have their faces ripped off.

NotApplicable's picture

Ummm... you forgot the "#winning" tag.

Half_A_Billion_Hollow_Points's picture

I hope the $250,000 FR note comes with the face of "The Honorable John Corzine".  That will be awesome!

Pure Evil's picture

If anything, we can always add his face to Mount Rushmore, right next to Evil Lincoln.

eclectic syncretist's picture

Exactly, your savings are nothing more than a Vegas style gambling chip to the banks.  In fact they are less than that since a real gambling chip can be levered into a 10X plus bet.

Miffed Microbiologist's picture

This was my epiphany moment on ZH. For 45+ years I had believed when I deposited my money in a bank I had " money in the bank". Then I learned here I did NOT have money in the bank but instead was OWED the money I had deposited. Everything fell into place then and the scam discussed here finally became clear. I finally realized the only way to fight back at my level was to engage only in tangible realities. This is the only hope to escape the " Poof.....and it's gone"

Miffed;-)

TheSilverJournal's picture

Yup, it's a worldwide fiat monetary ponzi 100+ years in the making that's soon to implode. Never before has the entire world gone through currency collapse at the same time. It will be the most significant event in human history and will be the largest / swiftest transfer of wealth ever.

MillionDollarBonus_'s picture

It's realism. We need government. Tax is necessary, and so are bank account levies. If you can't handle these facts, then I suggest you join the kiddies table, and leave the adults to discuss real, progessive solutions to the problems we face.

glenlloyd's picture

your "fairness doctrine" makes me want to puke...

nope-1004's picture

You mean we "face problems"?

 

What happened to green shoots?  What happened to housing recovery?  What happened to modest economic growth?  LOL...... MDB admits we face serious problems.  Now that in itself is funny coming from a troll.

Aside from that tidbit, I stopped reading MDB quite a while ago.  At first the comedy routine was funny.  Now he just shows how stupid he is.  Nothing funny about stupidity.

 

MillionDollarBonus_'s picture

We are on the road to recovery, but that doesn't mean we don't face the threat of instability. We need to put in Federal safe-guards against this type of problem. The FDIC takes care of depositors, but which department is underwriting the equity of our banking institutions? This is just another piece of the puzzle in the quest to build a stronger, safer, more liberal economy. 

Schmuck Raker's picture

"...which department is underwriting the equity of our banking institutions?"

I believe that falls under the purview of the Fed, and CNBC.

TheSilverJournal's picture

A strong economy would be built on institutions that don't depend on the backing of the government. We are on the road to max pain because when the credit bubble bursts and the government goes bankrupt, the credit / government dependent economy will be utterly devastated to the likes of which has never been witnessed.

gdiamond22's picture

That liberal economy you 'Progressives' dream brought Argentina from a top 5 economy to its knees. You know about Europe, now you want the same in the USA. When will you realize that the only thing Government has a fantastic track record of is controlling and killing people. Everything else they do turns to rubble  - sometimes instantly, sometimes slowly. You are a mindless, worthless sheep MDB. I actually have pity for your lack of intellect.

eclectic syncretist's picture

Dear Million Dumb Bloviations

YOU CAN"T COUNTERFEIT YOUR WAY TO UNIVERSAL PROSPERITY, you shit for brains asshole.  Your vacuous bullshit has quit being mildly entertaining and is now merely tedious and dull.  Get yourself together so at least you'll look good going down with the ship over the next several months.

Pure Evil's picture

Ok Harry, I think its time you give up and go sit in the corner and spank your Wanger.

TheSilverJournal's picture

Clearly, a federal tax is not necessary because the US went most of its history without one. Likewise, clearly a central bank (and therefore a bank levy) is not necessary because the US went most of its history without one.

What's necessary is capitalism and freedom, and there will never be capitalism with the central planning of the currency because money is 1/2 of every transaction.

akarc's picture

"Adam Smith focused on understanding how people can freely make a living, which was what Brits had been doing with considerable success for hundreds of years. He grasped the concept that people prosper when they can freely choose the terms of their business or their work and trade freely, unhampered by government or monoplies, and protected by the rule of just law from unprincipled exploiters."

Freedom and Capitalism do not necessarily go hand in hand

TheSilverJournal's picture

I don't see how your quote has anything to do with the your statement at the end, but yes, freedom and capitalism do go hand in hand. Capitalism simply means you have the freedom to keep what you earn, and you have the freedom to do whatever deals you please. What capitalism does not mean you have the freedom to commit fraud and the freedom to impeed on other people's property (not free to pollute, steal, injure). If you don't have capitalism, you are not free because then your life (labor) and property are not your own.

akarc's picture

when I see people mention capitalism I am always reminded that "true" capitalism can not exist in a corrupt and unprincipled society, e.g our Klepotocratic banking/government alliance.

To many people equate capitalism as allowing apple to offshore jobs to cripple, exploit and create slavery in another country. Which does absolutely nothing to promote freedom. 

TheSilverJournal's picture

Unfortunately, that is very true. Many will blame the coming collapse on capitalism, when it is the exact opposite of capitalism that's the cause (central banking, government debt, government involvement in housing markets, government dependency on entitlements, student loans backed by government, government regulation, government bailouts, government picking winners and losers). My main concern is not if the collapse will come...the collapse is inevitable and may be entering the eminent stage. My main concern is that capitalism gets the blame. When the real pain comes, cries for the government to help will grow the loudest and if these cries are answered, the US may literally be no more. On the other hand, if capitalism, freedom, and the constitution are returned to, we may shortly see prosperity that is almost unimagineable. Which path will we choose?

akarc's picture

Agreed. In my little corner of the world the terms freedom, constitution and capitalism have become almost Orwellian. Redefined in such a manner asw to suit ones own political agenda. This scares me as how many crimes will be committed in these names and called just.

My fear, or I am pretty much convinced, at this stage of the game is that "We the People" will choose the path we are told to follow. 

TheSilverJournal's picture

I would be very sad to see my friends and family live through that. Personally, I won't subject myself to an ultra repressive state. Hopefully freedom and capitalism win out.

NotApplicable's picture

Well, you don't understand what capitalism is then (note the lower-case "c").

Capitalism is NOTHING more than owning your own labor as well as any means of production you require, in order that you can produce more than you consume, in order that you can take your surplus (savings) and use it to invest in further productive tasks.

Without freedom, there can be no capitalism. without capitalism, there can be no freedom.

akarc's picture

I submit that for most of the public, capitalism has been redefined. I would go so far as to say the legislature as redined it.