Five U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives

TEC ^ | 09/27/2014 | Michael Snyder

[SeekAndFind]

When is the U.S. banking system going to crash? I can sum it up in three words. Watch the derivatives. It used to be only four, but now there are five "too big to fail" banks in the United States that each have more than 40 trillion dollars in exposure to derivatives. Today, the U.S. national debt is sitting at a grand total of about 17.7 trillion dollars, so when we are talking about 40 trillion dollars we are talking about an amount of money that is almost unimaginable. And unlike stocks and bonds, these derivatives do not represent "investments" in anything. They can be incredibly complex, but essentially they are just paper wagers about what will happen in the future. The truth is that derivatives trading is not too different from betting on baseball or football games. Trading in derivatives is basically just a form of legalized gambling, and the "too big to fail" banks have transformed Wall Street into the largest casino in the history of the planet. When this derivatives bubble bursts (and as surely as I am writing this it will), the pain that it will cause the global economy will be greater than words can describe.

If derivatives trading is so risky, then why do our big banks do it?

The answer to that question comes down to just one thing.

Greed.

The "too big to fail" banks run up enormous profits from their derivatives trading. According to the New York Times, U.S. banks "have nearly $280 trillion of derivatives on their books" even though the financial crisis of 2008 demonstrated how dangerous they could be...

American banks have nearly $280 trillion of derivatives on their books, and they earn some of their biggest profits from trading in them.

[Toddsterpatriot]

But, the facts are that B of A is trying as we both type to slide trillions of these damn derivatives into or on to it’s subsidiary Merrill Lynch so that UP TO the amount of the Fed’s guarantee they will be covered BY THE TAXPAYER.

Sliding trillions of profitable derivatives from Merrill to B of A is proof that B of A got in trouble because of derivatives?

I'm not sure about your logic here.

[Toddsterpatriot]

I’m comfortable with believing that almost any knowledgeable, experienced person of intellect, except perhaps yourself, would read that article and other articles available on the subject and conclude as most have that “derivatives” were and are the cause of B of A being a worthless company.

Worthless? LOL!

Their net income last year was $10 billion.

Their market cap is about $180 billion.

Their net tangible assets as of December 2013 were $157 billion.

Generally speaking, junk stock is stock that has no value.

$180 billion is a bit more than "no value".

Well, unless their auditors are perpetually drunk, their balance sheet is a wreck as evidenced by the value of the company. Can’t help you any more than that.

It's becoming obvious that you can't help anyone.

On your question of “What did they steal?”.........I could write a book and many have been written on the subject;

You were talking about JPM, I don’t need a book.

OK.

A paragraph explaining what they stole would be fine.

What are they doing wrong? Be specific.

They are using depositors and the taxpayers to cover their RISK so they can book “profits” in the billions and LOSSES be damned!

You keep making up terms that don't make any sense, accounting or finance wise. "Cover their risk" is a nonsense term.

so they can book “profits” in the billions and LOSSES be damned!

Billions in profits kinda means there are no net losses. Sorry.

LOL, your talking about alleged profits, I am talking about REAL losses, in the hundreds of Trillions, with T!

JPM has real losses, in the trillions? You're confused, with a C!

your argument on “profits” is meaningless in this discussion because we are talking about LOSSES in the hundreds of TRILLIONS.................. NOT ISOLATED PROFITS.

If banks are losing hundreds of trillions, who is making hundreds of trillions?

B of A is now trying to slide an amount of their derivatives LOSSES, equal to Federal Coverage, in Merrill Lynch’s back door so the government will cover their ass!

Moving an imaginary (in your head only) loss from Merrill to Bank of America would reduce Bank of America's profits. They made $10 billion last year, where is the loss?

Sorry again that you apparently scanned my post and did not read Jonathan Turley’s article. You need to reread both.

If I reread his 3 year old article, will you be less confused?

Because I understood it just fine and it didn't say what you're claiming.

I will not comment on whose wrong and who’s right here.

That might be a good idea on your part. Your batting average hasn't been too hot here.