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Pam and Russ Martens: Fed and FDIC suddenly awaken to the threat of big banks' derivatives
By Pam and Russ Martens
Wall Street on Parade
Monday, June 24, 2024
Since the financial crash of 2008 and the Federal Reserve's multi-trillion-dollar bank bailouts that followed, the Office of the Comptroller of the Currency has been waving a giant red flag every quarter in its Bank Trading and Derivatives Activities reports.
For 16 years the OCC has been reporting that just four megabanks are responsible for more than 80% of the trillions of dollars in bank derivatives.
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As the chart published with this report shows, as of December 31, 2023, Goldman Sachs Bank, JPMorgan Chase Bank, Citigroup's Citibank, and Bank of America held a staggering total of $168.26 trillion in derivatives out of a total of $192.46 trillion at all U.S. banks, savings associations and trust companies.
That's four banks holding 87% of all derivatives at all 4,587 federally-insured institutions in the U.S. that existed as of December 31, 2023.
Now it would appear that some market-savvy bank examiner embedded in one of those megabanks has had an epiphany and decided to ask the question: "How is it possible that all four of these megabanks with trillions of dollars in derivatives happened to be on the correct sides of these trades during the fastest and steepest interest rate increases in 40 years?"
Multiple bank counterparties to these trades should be reporting massive losses and yet all we hear are crickets. ...
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