TBTF Get TBTFer: Top 5 Banks Hold 95.7%, Or $221 Trillion, Of Outstanding Derivatives

Tyler Durden's picture

Every quarter the Office of the Currency Comptroller releases its report on Bank Derivative Activities, and every quarter we find that the Too Big To Fail get Too Bigger To Fail. To wit: in Q4 2011, of the total $230.8 trillion in US outstanding derivatives, the Top 5 banks (JPM, BofA, Morgan Stanley, Goldman and HSBC) accounted for 95.7% of all Derivatives. In some respects this is good news: in Q2, the Top 5 banks held 95.9% of the $250 trillion in derivatives. Unfortunately it is also bad news, because $220 trillion is more than enough for the world to collapse in a daisy chained failure of bilateral netting (which not even all the central banks in the world can offset). What is the worst news, is that the just released report indicates that in addition to everything else, we have now hit peak delusion, as banks now report to the OCC that a record high 92.2% of gross credit exposure is "bilaterally netted." While we won't spend much time on this issue now, it is safe to say that bilateral netting is the biggest lie in modern finance (read How US Banks Are Lying About Their European Exposure; Or How Bilateral Netting Ends With A Bang, Not A Whimper for an explanation of this fraud which was exposed completely in the AIG collapse). And just to put this in global perspective, according to the BIS in the first half of 2011, global derivative gross exposure increased by $107 trillion to a record $707 trillion. It will be quite interesting to get the full year report to see if this acceleration in gross exposure has increased. Because if it has, we will now know that in 2011 European banks were forced up to load up on several hundred trillion in mostly interest rate swap exposure. Which can only mean one thing: when and if central banks lose control of government bond curves, an rates start moving wider again, the global margin call will be unprecedented. Until then we can just delude ourselves that central planners have everything under control, have everything under control, have everything under control.

Top 5 bank derivative exposure:

Exposure by bank:


And the delusion that everyone is somehow hedged. To the tune of $230 trillion!

Source: OCC

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Chief KnocAHoma's picture

So what. Some bets go one way, some the other. It will come out in the wash.

In the meantime - Mama wants a Trademark! http://annoyanidiot.blogspot.com/


Theta_Burn's picture

Dated a girl that was bilateral... I highley recommended it

MillionDollarBonus_'s picture

This hatred of the too-big-to-fail concept is indicative of a totally unjustified bias toward small business vs. larger more reputable corporations. I’m personally sick of this ridiculous prejudice. We DON’T NEED tons of new small businesses. We already have plenty of large corporations that provide all the services and products we require. Furthermore, many of these corporations have good relationships with government officials, which shows that they support American values.  

The Big Ching-aso's picture



As long as no TBTF has to pay out on their derivatives we should be okay.   Okay as shit balls, but ok.


Nothing To See Here's picture

This is just an accounting problem. Here, I printed a couple more zeroes to that revenue column. Problem fixed.

Stax Edwards's picture

MDB seems to be working on his thesis in behavioral econ.  This is one of your better comments MDB, bravo. 

Brawndo FTW!

LuKOsro's picture

Oh the weather outside is frightful, 
But the fire is so delightful,
And since we've no place to go,
Let It Snow! Let It Snow! Let It Snow!



Theta_Burn's picture

  That particular dish is reserved for anal.ists

centerline's picture

When my "ship comes in," that is exactly what I would expect to see.

WonderDawg's picture

It's easy to grin when your ship comes in and you've got the stock market beat...

i_fly_me's picture

My dingy is bigger than your whole boat!

A Nanny Moose's picture

I hate the ocean, I'll stick to the failroad.

monopoly's picture

MDB. In case you are not aware the majority of business hiring is done by small business, not large corporations.

Tyler, where did you find this guy?

MillionDollarBonus_'s picture

So ... ? That is completely irrelevant to my point. There are already PLENTY of large corporations providing all the goods and services we need. Starting your own business has become nothing but a self-satisfying and gratuitous pursuit. It also has many unhelpful connotations such as those of “fighting the man” or “rebelling against authority” which have become quite wearisome to say the least. There are plenty of opportunities for entrepreneurs WITHIN the current corporate framework. They can join a franchise like McDonalds, or they can work their way up into a top managerial position in a reputable Fortune 500 company. There is simply NO NEED to ‘compete’ with respected corporations.

monopoly's picture

So you expect the millions of those out of work to line up in front of a large company and get a job to provide the goods and services we need. What the hell are you talking about. You think there is enough work from the large corporations to hire them all. And what is wrong with a "self-satisfying pursuit". That is what America is all about. Or was. Start a business, be successful, hire, help others and make a profit. 

You do not make any sense, but then again you never did. 

MillionDollarBonus_'s picture

You think there is enough work from the large corporations to hire them all

Well large reputable corporations WOULD be able to hire them if there weren’t so many “small businesses” stealing their market share. Starting a small business is not only a selfish pursuit, but it also threatens the jobs of many hard-working Americans working at top corporations who often need to start unions just to defend their way of life. Everyone likes to talk about the jobs small businesses create, but nobody wants to talk about the jobs they destroy at reputable competing firms.

Ned Zeppelin's picture

MDB is the greatest of the fake trolls. Truly, comic genius at work.

Who needs small business when big businesses can handle everything?

WonderDawg's picture

No doubt. The guy is hilarious. I think this thread might be one of his more ingeniuous efforts. Small business stealing jobs from large corporations. I gotta LMFAO on that one.

Chupacabra-322's picture

@ MDB,

You're a Fascist piece of shit. 

Hulk's picture

Its called humor you ditz...I can't even fucking believe that MDB gets the number of panties all waded up that he does

MeelionDollerBogus's picture

How is hiring a theft of job market-share?

MeelionDollerBogus's picture

The fair, respectful big business environment of American values that MDB supports so much:


monopoly's picture

I think MDB is a plant that Tyler pays to see if we all break down and start twirling our beads. I just know it. :)

ChrisFromMorningside's picture

MDB = ZH's resident Jester. He's here to humor us by lampooning mainstream opinion. You're slow to catch on. :-P

skepticCarl's picture

Monopoly, you've been punk'd.

Random_Robert's picture

"There are plenty of opportunities for entrepreneurs WITHIN the current corporate framework. They can join a franchise like McDonalds, or they can work their way up into a top managerial position in a reputable Fortune 500 company."

That is a complete fallacy.

There are always more entrepreneurs than there are corporations for them to join.

Competition is healthy. Corporate oppression is not.

falak pema's picture

I know its a bit like having sex when you're Pope, or a cardinal. But when you read the history they were at it all the time! WHy oh why did they want to compete with the common man in such common ways! There was NO NEED to 'compete'. They all wore red hats and had a golden ticket thru the pearly gates! Sooo respectable...

I Am Ben's picture

I don't understand the downvoters.


You make Perfect Sense.

LongSoupLine's picture



"...these corporations have good relationships with government officials, which shows that they support American values." - MDB


LMAO...I just soiled myself!  MDB, you continue to be top troll, hands down!

DaveyJones's picture

their relationships are so good, I'd say they were sexual

rodocostarica's picture

Another good one MDB. The more I read your posts the more I appreciate your brand of humor and sarc.  Im now greening you every post. Way to go man.

Schmuck Raker's picture

Much better MDB, you'd been slackin'.

eatthebanksters's picture

MDB go back to econ 1...Perfect competiton is much better than oligopolies.  Big banks can do more things than small banks because of their size, but they do less thingsas well.  They are so bloated and so formula driven that they cannot do customized banking except for the largest clients.  We've seen the results of their processes..the housing crisis is one of those.  They cannot be profitable any more working off of spreads on loans, they need to create financially engineered products where someone MUST lose for them to make their profits  (GS - Abacus as an example).  Big is not bad if it is honest and efficient, the problem is the big banks today lie, cheat and steal...their size proposes systemic risk and their actions highten that risk.  I for one would rather see 10,000 small banks replace the TBTF banks.  I would like to see lending become personal again, where the banker knows his client and can help solve problems with wise solutions (instead of creating more problems).  Let's the borrowers of big money syndicate their deals; like they used too.  And fuck London, if those guys want to do stupid risky deals, let them. I'don' know if you're a big banker who really believes what he says, if you are being sarcastic or are truly just a fucking moron...it really doesn't matter as long as we don't listen to people like you.

falak pema's picture

lol, your circular tongue in cheek is awesome. You could swallow your tail and enjoy eating your own eyes as the lights go pop!

MeelionDollerBogus's picture

Reputable like Bank of America stealing everyone's homes and mass forgery? http://www.youtube.com/watch?v=EKmz1vCuNQk

or reputable like MF Global's Jon Corzine authorizing stealing seg-funds money to pay off his personal bad choices of investments and filing the wrong bankruptcy (ch 11) to stop customers from getting delivery of their grains, gold & silver?

MDB? What does "reputable" mean to you?

Is stealing now a good market American value to you, mini-B?

We need tons of honest businesses unlike the ones we have now, and I hope they are mid-sized instead of too small or too big.

What we have now is too crooked to fail as these companies break laws & buy their way out of jail.

No OB Wan Kenobe's picture

Good one MDB. You are outdoing yourself.

Savyindallas's picture

you are one stupid motherfucker. I can't help believe that most of the people approving your post thought that you were being facecious and sarcastic. You deserve to be a serf sucking your master's dick every day

ClassicalLib17's picture

Sweet nectar of bourbon, MDB,  you hit a home run.  You're back in the game , baby.  Bravo

Subliminal messenger's picture

"Furthermore, many of these corporations have good relationships with government officials, which shows that they support American values."

What American values are you talking about?

Bomb Iraq values for Halliburton values?

Torture Central Americans for United Fruit Company values?

Attack Iran to save the soon-to-be-valueless USD values?


Subliminal messenger's picture

MDB, can you explain me why the United States has an average monthly trade deficit of 45 billion dollars if there are plenty of large corporations to provide all the services and products you require?

Theta_Burn's picture

ALWAYS a asymmetrical exclusion zone...

ChrisFromMorningside's picture

Unless one major party in the derivative chain goes under and the entire netting chain is broken. Then the banking sector would experience net losses in the trillions of dollars and central banks would either have to take on a new bailout of historic proportions or allow a systemic meltdown of the 20 largest banks in the Western world.

But that could never happen, could it? 

Uber Vandal's picture

GDP of the PLANET : $61.96 Trillion.

Notional value of derivatives of "top 5" banks: $221 Trillion.

What can possibly go wrong?

A Nanny Moose's picture

"I am Trayvon"

"Frankied Says Relax."

LongSoupLine's picture



Yeah, but AAPL hit a new high, so all's ok.


Oh...and Maria "my voice etches diamonds" Bartiromo says it's "time to take on more risk"