The Dallas Fed Is Calling For The Immediate Breakup Of Large Banks
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  • 1. The Dallas Fed Is Calling For The Immediate Breakup Of LargeBanks Unsecured Bank DerivativesSet New RecordA good example for reading past the headlines to get the whole story:"$707,568,901,000,000: How (And Why) Banks Increased TotalOutstanding Derivatives By A Record $107 Trillion In 6 MonthsSubmitted by Tyler Durden on 11/26/2011 - 20:44 AIG American InternationalGroupCounterparties Gross Domestic Product Mean Reversion MF Global notionalvalue OTCOTC Derivatives VolatilityWorld GDP IMF 2012 estimated at 73.74 Trillion $!ctype=l&strail=false&bcs=d&nselm=h&met_y=ngdpd&scale_y=lin&ind_y=false&rdim=world&idim=world:Earth&ifdim=world&hl=en_US&dl=en_US
  • 2. OCC’s Quarterly Report on Bank Trading and Derivatives ActivitiesFirst Quarter 2011 derivatives market activity in the first half of 2011 Lobbying Against DerivativesTrading Ban Long Road to Regulating DerivativesPublished: March 24, 2012That would minimize the practice of trading derivatives as private bilateralcontracts, in which the price is whatever the bank says it is. Over a year ago, theC.F.T.C. sensibly proposed a system in which buy and sell offers would beelectronically posted and widely accessible. In response, industry lobbyists andsome lawmakers have made the absurd argument that open trading would hurtbanks’ flexibility to continue doing business as usual.
  • 3. G20 and other discussion fora on derivative regulation, comG20 andother discussion fora on derivative regulation, commodity pricevolatility and food speculationEriva
  • 4. Derivatives May Still Endanger The Financial SystemDerivative instruments held by US banks have a nominal valueof $250 trillion– or about 150 times the aggregate balancesheet equity of these same banks, according to figures compiledby the Federal Deposit Insurance Corporation, the FDIC, theregulatory agency responsible for ensuring the safety ofbanks across America.It is for this reason that you might ponder on whether theabsurd level of leverage in the banking system might well rockthe nation at a moment when economic recovery is stillrelatively fragile.You won’t read these warnings in 2012 annual reports ofGoldman Sachs, JP Morgan Chase, Citigroup, or Bank ofAmerica or Morgan Stanley. But, if you are lucky enough to layyour hands on the report from the privately help PlymouthRock Company, an insurance company chaired by Jim Stone, aformer chairman of the CFTC, you will read the following:“It was the systemic risk arising from oversized andinterconnected derivative positions that turned a real estateprice correction into a general collapse, and now exacerbatesthe European debt crisis,”: Stone writes. The $250 trillion openinterest in derivatives– held mainly by about 6 too- big- to -failUS banks– “is out of scale with any legitimate hedging function,incompatible with the notion of financial services as alubricant rather than a driver in a free economy, and a sourceof risk beyond the ability of any executive or board member tofathom, let alone manage prudently.”
  • 5. We can end the crisis without passing the costs onto ordinarypeople. This would also reduce debt, poverty and economic chaos.But its going to need massive public pressure so we all need to getinvolved. reduce debt, poverty and economic chaos. But itsgoing to need massivepublic
  • 6. pressure so we allneed to get involved.