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Just When You Thought Wall Street's Heist Couldn't Get Any Crazier...
Submitted by Pam Martens & Russ Martens via WallStreetOnParade.com,
Just when you thought Wall Street’s heist of the U.S. financial system couldn’t get any crazier, along comes a regulator’s report on FDIC-insured banks exposure to derivatives. According to the Office of the Comptroller of the Currency (OCC), one of the regulators of national banks, as of June 30 of this year, Goldman Sachs Bank USA had $78 billion in deposits, and – wait for it – $45.7 trillion in notional amount of derivatives. (Notional means face amount of derivatives.) According to the OCC report, Goldman Sachs Bank USA’s notional derivatives are an eye-popping 563 percent of its risk-based capital. You and every other little guy in America is backstopping this bank because it’s, amazingly, FDIC insured.
Compared to its Wall Street peers, Goldman Sachs Bank USA is a midget. JPMorgan Chase Bank NA has just shy of $2 trillion in assets; Citibank NA (part of Citigroup) has $1.3 trillion; Bank of America NA $1.6 trillion. That compares with Goldman Sachs Bank USA, which just became an FDIC insured bank at the height of the financial crisis on November 28, 2008, which has a puny $122.68 billion in assets. But it wants to play with the big boys anyway when it comes to derivatives, as the chart above shows.
Based on the data, it looks like the average taxpayer is backstopping a ton of risk at this FDIC insured bank and getting very little in return. According to financial data from the FFIEC for the second quarter, the bank had $25.1 billion in trading assets and according to the company’s web site, it’s those high net worth clients of its Private Bank that it’s working with “to manage their cash flow needs, finance private asset purchases, and facilitate strategic investments.”
According to the New York Times, Goldman Sachs private wealth management services require a minimum of $10 million to get in the front door. The same Times article says Goldman was even kicking out its own employees’ accounts if they fell short of $1 million.
Quite a few things come to mind in reading these various regulatory reports.
First, almost none of the promises that were made to the public about what was going to happen under Dodd-Frank financial reform is actually happening. The push-out rule was supposed to push these trillions of dollars of risky derivatives out of the insured banking unit to prevent another epic taxpayer bailout. Citigroup, in a sleight of hand in December, simply legislated that investor protection out of existence.
Then there was the promise that these trillions of opaque derivative contracts were going to come into the sunshine by being forced onto regulated exchanges. That hasn’t happened either – seven years and counting after derivatives blew up the U.S. economy, leaving millions unemployed and a nation still struggling to find a pulse in its growth rate. According to the FFIEC report, “centrally cleared derivatives” at Goldman Sachs Bank USA represent only a small portion of its total derivatives.
And then there is the matter of allowing the public to assess counterparty risks building up at our insured banks after AIG sold credit protection derivatives (credit default swaps) across Wall Street that it could not pay in the crisis, forcing another massive government bailout. On the FFIEC report, the lines that would show Goldman Sachs Bank USA’s greatest single counterparty risk and its top 20 greatest counterparty risks, are both marked “Confidential.”
Welcome to another day at the casino where the model continues to be — heads they win, tails you lose.
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...you don't comptroller us, we comptroller you. [/nurse, they were expendable]
Not to worry as the Federal Reserve monitors their member banks and sets high standards.
Funny when college football has problems they look to the NCAA and FIFA when it has problems?
Why does the Federal Reserve get a pass on it's members?
Oh what a tangled web we weave, when we FIRST practice to decieve.
If it is four or five banks betting derivatives then tell them to stop. It's as simple as that.
Glass-Steagall.
Bankruptcy..
FUNDAMENTAL TRANSFORMATIOM
CHANGE YOU BETTER BELIEVE IN
All the more reason to get Bill Clinton back inot the White House. Those boyz ain't gonna be stealin without they pay the proper protection money.... and get a tax deduction too.
Bra ha ha ha
Israel is not just a POS dirt land in the ME...
And with much fanfare & media hype there were those that expected Chris "My Ole Lady Works For An Offshore Financial Concern" Dodd and Bwaney "I've Been A Member Of The House Banking Committee For Like...Forever" Fwank to actually "change" anything...lol.
53 trillion omfg.
It's funny. I wanted to cash in a bucket of change and open a small savings account for my daughter, so I went looking for my local Goldman Sachs bank branch. For the life of me, I couldn't find one! Really strange considering they became an FDIC insured bank in 2008. I guess I just didn't look hard enough. My bad I'm sure.
Check in the alley between the tat parlor and nail salon. Ask for Vinnie.
Jesus. No that should be added to that "Fear List".
How can you earn commissions if you aren't selling something?
Therein lies the heart of what is a parasitic system that skims trillions from the real economy.
it is called 'reversing the shemitah': Foisting trillions of even more debt upon the Goyim!
Goldman Sachs Bank USA had $78 billion in deposits, and – wait for it – $45.7trillion in notional amount of derivatives. (Notional means face amount of derivatives.) According to the OCC report, Goldman Sachs Bank USA’s notional derivatives are an eye-popping 563 percent of its risk-based capital.
That does not compute. $45.7 trillion is 58590 percent of $78 billion
Risk-based capital, not total capital.
I say that not knowing if there is such a distinction nor what it would be if there was one, but there you go.
This is obviously bullish. There's no reason Goldman can't set a new record here and reach the pivotal 60,000% mark. If you're gonna bet with other people's money with complete immunity to the law, HFT Super Computers, Insider Information, plus full knowledge the government will bail you out should something goes wrong, then go big or go home!! Heck, I'm surprised they haven't reached the 100,000% market yet. What's the deal Goldman, no ballz?
They don't want to appear greedy.
...especially while they're doing God's work...
How about the healthcare heist? WFT is going on in 'merica.
Healthcare should be free like in Cuba.
Healthcare is not 'free' in Cuba (or anywhere else for that matter), just much less expensive than (say) the US, and everyone in the country has access
STFU douche. Go vote for biden.
Do you mean ax-us?
Obamacare is a total destruction event for America's middle class.
For example, more then half my former docs do not accept any form of the Obamacare Tax Plan and with a $5,000 deductible who can afford to go?
Ding-ding-ding. Ve Haf a Weiner!
Health care costs are such a complete, total budget-ass-busting boondoggle I am amazed there hasn't been a full-scale revolt by doctors and healthy people.
Let's face it, when you're in your 20s, 30s, 40s, what the fuck do you need health care for? You're generally helathy, unless, of course, you're one of those obese, dim-witted clusterfucks known as a member of the FSA.
I'll be 62 in a few months and I've had about $6k in medical costs since I turned 17. Did I need to insure for that cost? Fuck no.
Americans are just fucking stupid. WTF happened to this country over the past 40 years? It's a fucking mess and should be burned to the ground.
aww, did I step on Miss Information's wittwe game of wies? There, there, wittwe pookie. Have a wemon to suck on.
Dear imbecile,
Everyone in the US has access to healthcare.
Sincerely,
Fuck your socialist bullshit.
Dear troglodyte homunculus,
As if you're fooling anyone with your cunning stunning stunts,
"The United States is among the few industrialized nations in the world that does not guarantee access to health care for its population."- 2004 Institute of Medicine.
Thanks for coming out.
Explain how it is free in Cuba or step of sucka.
I'm long nooses and guillotines. I'll have them delivered to DC and Wall St when the time is ripe.
I'll help build the gallows. Guillotines are too fast and painless. I'm with you on being long on rope!!
Pussies, what's happened to good old hanged, drawn and quartered?
Dodd-Frank was a half measure at best anyway. Bring back Glass-Steagall.
And the real one and not some alternative version of it.
Glass-Steagall Act, June 16, 1933 - 53 pages (pdf)
https://ia902702.us.archive.org/7/items/FullTextTheGlass-steagallActA.k.a.TheBankingActOf1933/1933_01248.pdf
Frank-Dodd Act, January 5, 2010 - 848 pages (pdf)
http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf
Better than that, bring back Steven Segal.
More scaremongering bullshit with the derivatives. If a bank has $50 trillion notional they are also playing the other side, assume there is a 5% gap (so 55% is long credit and 45% short to make it simple). If the 1 year swap is roughly 50 bps and it goes up 10 bps from credit spreads widening, then the 10 bps higher level gives the long position an incremental cost on the swaps is $5B per annum. Given the gap is usually closer to roughly 2%, a more realistic increased cost per annum is $1B (51% long credit 49% short). Just quick, easy math. While I'm not saying losing a billion is great, for these giants its far from a disaster. Pieces like this are dog shit, ZeroHedge.
with the usa gubbermint providing free counterparty insurance you aren't wrong.
blankfein's bonus is guaranteed by the usa gubbermint.
None should be playing on taxpayer money!!
False assumption - yes they do play the other side BUT - the other side may not pay.
Look to AIG to see what happens.
45T might by 10B in risk normally - but take away the other side (beyond ability to pay) and its now 25T in risk.
The caveat would be that a court would just order all of them void and not payable - but this would single handedly destroy the futures/credit markets going forward. No one would trade any futures/swap or any other derivative if you knew that a court would just wipe them as if they did not exist. Many entities use these markets for actual hedging - this would make this useless as well. The result would be massive magnitudes of expense piled in for the "risk" of not getting paid to the point where all such contracts have a negative expected rate of return.
Pathetic to immediately invoke the use of violence and and coercion, when instead you could let the market handle such actors.
"No one would trade any futures/swap or any other derivative if you knew that a court would just wipe them as if they did not exist."
Wait, I thought that was already the way it goes.
No Chris, the reason they fight tooth-and-nail to keep this stuff off of an open exhange is because it's a Ponzi scheme. The notional value is so huge because they are trading these derivatives among themseslves, marking them up artificially by a few basis points, then booking "profits" and getting huge bonuses. To assume otherwise is naive. When it blows up again the sucker taxpayers will bail them out then rinse and repeat. Oh, but we have to cut Social Security because there are too many old people!
The notional represents the amount that is used as a "base" per se to charge rates/pay rates out, depending on which leg is purchased/sold, respectively. If they're not doing it with taxpayer money and they implode who gives a shit? For your information, we need to get rid of SS, Medicare,and Medicaid. I'm not for a single penny of welfare, corporate or personal. I want to have my life as an individual, free from paying into the other assorted bullshit you think is justified (bankrupt entitlements).
Chris88 - So then the TRAP bailout sh0uld not have taken place either...correct? Every Bank CEO would hacve lost 90% of their wealth as all the banks stock prices go to zero. They would have had majority of their assets in Bank stock.
You are either too inexperienced or naiive. I think inexperineced. Probabl;y work fr a bank as a junior trader and should be happy you are still getting a paycheck.
Clown (fitting name) : I was and an opposed to TARP, I'm.opposed to all anti-capitalist policies which include bailing out losers,whether a company or individual. Too inexperienced? I'm a senior equity analyst for a hedge fund with $850M+ AUM, have been here for 5 years. Before that I was at a boutique sell side for 3 years. I'm inexperienced? Come on, pissant, tell us all your experience. Total loser.
Yeah, until one of the conterparties in the clusterfuck daisy chain of derivatives goes bankrupt and cannot pay.
http://www.zerohedge.com/news/2015-06-12/deutsche-bank-next-lehman
The derivative holdings at Deutsche Bank make every one else look thrifty.
Whatever! It's all wasteful gambling that adds nothing to society and only creates more strain on the financial system. So go find somewhere else to defend worthless fuckfaces!
"What if something happens, like...2008, Lloyd?"
"Don't worry, Leonard, we're backed by the best! The US Taxpayer!"
This is the final assault on our children’s futures. I’m up for hanging bankers and the congressmen that made this possible. Every fucking one of them that voted for this shit!! We need to see the list of the ones that did this!!
Don't these mother fuckers ever take a walk in the park? Thousands of fruit loops in New York and not on banker gets mugged, shot, ass raped or pissed on. WTF? they live a kevlar cocoon and spoon fed pureed babies?
lloyd doesn't ride the subway to work
Actually, Wall Street On Parade did a series of articles on banker deaths, with the tally being around 35 or so as of late last year (mostly Goldman-Sachs bankers), and this included dudes who were nail-gunned, hung, mysteriously fell of cliffs, and those who fell from tall buildings. I think what you mean is, why don't bankers OF REAL INTEREST (like Blankfein, Dimon, Corzine etc.) ever wind up dead? Now THAT is a good question...
It's a rhetorical question of course... they have friends in high places. More accurately, employees in .gov.
The other bankers had "enemies in high places". The problem is, the enemies threw those guys off the high places!
But ... but ... they are hedged and offset against other counter positions ....
Sure - but a hedge is only as good as the counterparty to that hedge. A bet in the opposite direction of a correlated asset is only as good as the counterparty ability to pay.
In a "normal market" most of those expire or only have minimal risk - even 45T might only have 10b risk or so because events are contained. Try dropping the SP500 by 50% in one day and have VIX go to 500 over several trading days and see what happens. VIX derivatives will not be paid - even with suit - limit up each and every day - he cannot cover. You cannot get Trader A to pay you $5m on his short VIX 10 contracts because his entire net worth is only $1m and he only had 300k in his account. You are not getting paid.
The long VIX was a hedge to long futures position SP500. That now has a $4m margin call due now. Good luck buddy.
Frakin financial vampires are for real and the American public are zombies. Welcome to my reality.
Don't blame me, man. I'm just an unsecured creditor.
Those two fuckers are in my deck of 53.
I'm certain that one of those jokers looks different than the other___.
JPMorgan Chase
Total Assets: $2,573,126,000,000 (about 2.6 trillion dollars)
Total Exposure To Derivatives: $63,600,246,000,000 (more than 63 trillion dollars)
Citibank
Total Assets: $1,842,530,000,000 (more than 1.8 trillion dollars)
Total Exposure To Derivatives: $59,951,603,000,000 (more than 59 trillion dollars)
Goldman Sachs
Total Assets: $856,301,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $57,312,558,000,000 (more than 57 trillion dollars)
Bank Of America
Total Assets: $2,106,796,000,000 (a little bit more than 2.1 trillion dollars)
Total Exposure To Derivatives: $54,224,084,000,000 (more than 54 trillion dollars)
Morgan Stanley
Total Assets: $801,382,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $38,546,879,000,000 (more than 38 trillion dollars)
Wells Fargo
Total Assets: $1,687,155,000,000 (about 1.7 trillion dollars)
Total Exposure To Derivatives: $5,302,422,000,000 (more than 5 trillion dollars)
With a total of over 275 Trillion exposure to derivatives I wonder, when a black Swan event will occur..........how long will it take for the Fed to print all this money to keep the banks save ?? Must be a hell of a time.....!
Source: http://theeconomiccollapseblog.com/?s=derivatives
".how long will it take for the Fed to print all this money to keep the banks save ??"
Depending on processor speed, probably about 0.01 microseconds. For the first round.
As for later rounds, thank god they upgraded to 64 bits years ago.
But, they're using Windows XP. Support ended last year.
On the bright side, if the dealer deals herself a pair of duces, there's no way possible these companies will ante-up and cover the bet. So, this is not about clearing the table, because it's just not that sort of game. It's more a charade, a kabuki rehypothication into infinity.
See? Even Wall Street has discovered, on a long enough timeline, infinity is just another number with a few different rules thrown into the bubbling mash of these debt derivative bootleggers.
So, chill out. If you're outraged at this sort of head game, you should be outraged that some girls get breast implants that are entirely impossible too.
We were all promised FDIC insured. Let's skip the drama and relax. Football is on t.v. It will all work out fine, I'm sure.
poco - Hey, a lol thing:
I really like(d) and like a rock band called Mott the Hoople. On a live LP, they introduced a hard drivin' rock tune by saying: " Now there might be some Poco fans here who think the music's too loud. Sometimes people want you to turn the radio down. Well, there's only one thing to do when the music's turned down too low. YA GOTTA TURN IT THE FUCK BACK UP AGAIN !! " (then they go into a pulverizing rock tune).
Hate to say it, but the biggest advocate of bringing back Glass-Steagall is Bernie Sanders.
Why did you write "Hate to say it"? Are you afraid you'll see somebody hit the down arrow?
Because so many posters just go ballistic when they read his name and care not that he might well be the candidate who most shares their values concerning Wall Street/Federal Reserve/1%/mega corps & Corporate welfare/MIC/Surveillance Agencies/Big Pharma, etc.
I just watched this video from this weekend.
Bernie Sanders Full Speech at Iowa Democratic Party Jefferson-Jackson Dinner
While watching it I started laughing because Bernie Sanders vows he "won't take" the Oligarch's money, but is vowing he's "going to take" the Oligarch's money.
HaHaHaHaHa...this whole thing is a fucking joke - every bit of it! HaHaHaHaHa
They may win today, tomorrow... everyone who depends on the "system" loses.
Nothing surprises me anymore. When the bankers lose, they just change the rules. Suddenly the economy is worse off, and everyone is more poor--Except them.
The FDIC has $487 insuring $25 trillion in deposits.
The President just deposited all the change he found in White House couches.
At some point you have to consider that this insanity is orchestrated and planned thus in reality sane and objective even though the perpetrators are clearly past the point of sanity.
Make the derivatives blow and watch the fun.
When Sarbanes-Oxley was passed after the 2000 crash, some people I knew, including my own wife, seriously believed that it represented real reform. I said I did not believe so, not even for a second. People called me a cynic, malcontent, nihilist, or worse...but, I ask you, would I post on ZeroHedge if I were like that?
Who is on the other side of these losses should they occur?
US citizens.
If I was an individual with total assets worth $120,000 and open options contracts worth $53 fucking million the SEC wouldn't even bother to arrest me; they'd shoot me on the spot.
Yes I agree...but these people are professionals with alot of "higher education" in their brains..they know what they are doing....don't worry...they are too big to fail...so there is no risk...only opportunity...