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Bailed Out Bank Trillion Dollar Derivative Exposure

“…Over 93.7% ($188 Trillion) of this gross exposure was held by only four bank s, J. P. Morgan Chase, Bank of America, Citibank and Goldman Sachs. One institution, J. P. Morgan Chase, accounted for $87 Trillion of the total exposure or approximately 140% of Gross World Product. …”
~OCC’s Quarterly Report on Bank Trading and Derivatives Activities: Fourth Quarter 2008
While President Obama is in firing mode, how about asking all his campaign contributors to resign as board members and executives of banks that bet trillions of dollars on mortage derivative securities and are now being bailed out by the American people to cover their massive losses from derivative securities trading.
The loss exposure from these derivative securities, mainly credit default swaps, is over a trillion dollars!
Time for the Federal Government to stop the bailouts, fire the management of these banks, and close this mess down.
Enough is enough.
Wall Street made billions of dollars on this business and should bear the losses.
The American people and the Federal Government should not bail these greedy, arrogant, stupid bastards out.
If the Federal Govenment continues to bailout these bastards, we know who the bought and paid for corrupt politicians are of both political parties.
The American people will be coming after them soon.
Massive theft of the American people are high crimes–crimes of the century!
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Background Articles and Videos
OCC Reports Fourth Quarter Bank Trading Loss
“…The report also noted that:
- Derivatives contracts are concentrated in a small number of institutions. The largest five banks hold 96 percent of the total notional amount of derivatives, while the largest 25 banks hold nearly 100 percent.
- Credit default swaps are the dominant product in the credit derivatives market, representing 98 percent of total credit derivatives.
- The number of commercial banks holding derivatives increased by 33 in the quarter to 1,010.
A copy of the OCC’s Quarterly Report on Bank Trading and Derivatives Activities: Fourth Quarter 2008 is available on the OCC’s Web site at: http://www.occ.gov/ftp/release/2009-34a.pdf.
http://www.occ.treas.gov/ftp/release/2009-34.htm
How Much Risk is the Treasury Really Assuming from the Financial Institutions?
Posted by John Slater on April 7, 2009
“…Last week the Comptroller of the Currency – Administrator of National Banks issued its quarterly report on Bank Trading and Derivatives Activities – Fourth Quarter 2008. In reviewing the report, several things become quickly apparent.
1. Derivatives Trading is a really big business; the notional amount of all derivatives positions at all U. S. commercial banks and trust companies that participate in this business was slightly more than $200 Trillion on December 31, 2008. That’s more than three times Gross World Product which the CIA estimates to have been a little over $62 Trillion in 2008.
2. Over 93.7% ($188 Trillion) of this gross exposure was held by only four bank s, J. P. Morgan Chase, Bank of America, Citibank and Goldman Sachs. One institution, J. P. Morgan Chase, accounted for $87 Trillion of the total exposure or approximately 140% of Gross World Product.
3. While the bulk of the exposure ($181 Trillion) was in the “traditional” derivatives markets, interest rate and FOREX swaps, almost $16 Trillion was in Credit Default Swaps, up from $1 Trillion in such transactions five years earlier.
4. What had once been a very profitable business for the major banks, turned decidedly sour in 2008, with net reported trading losses of $836 million for the year as compared with profits of $5.5 Billion in 2007 and $18.8 Billion in 2006. Drilling down to the details, Credit Default Swaps generated losses for the banks in 2008 of $12.6 Billion, more than offsetting gains for the year in Interest Rate and Foreign Exchange trading. …”
“…The OCC report provides a lengthy explanation as to why the notional amounts dramatically overstate the risk posed to the system by these contracts. First, the real credit exposure is not the notional amount of the contract, but the amount that the market has moved from the strike price of the swap: i.e. the net amount the counterparty would be obligated to pay to true up the contract based on current market conditions. This is referred to as the Gross Positive Value (GPV) of the contracts. Since this GPV is in effect an unsecured claim against another financial institution, it represents a credit risk to the holder of the claims. At yearend total GPV held by U. S. commercial banks was $7.1 Trillion. Actual credit exposure was much lower, however, as the holders have the legal right to set off this exposure against certain of their counter exposures to the obligor institutions (Gross Negative Fair Values).
The netted credit exposure was estimated to be only $800 billion. Added to this was Potential Future Exposure of $782 Billion based upon the amount by which the contracts could move in favor of the obligee banks to generate a Total Credit Exposure of $1.58 Trillion. For the top five derivatives trading banks (the four above plus the U. S. operations of HSBC) total credit exposure averaged 489% of the institutions’ Risk Based Capital at the end of the fourth quarter. At one bank, Goldman Sachs, credit exposure was more than 1000% of Risk Based Capital. To be fair this calculation does not take into account pledged collateral backing a portion of the credit risks, which the OCC estimates as typical averaging 30-40% of the exposure amounts, so actual credit exposure was presumably somewhat lower. …”
How Much Risk is the Treasury Really Assuming from the Financial Institutions? (Part 2)
“… Our previous post raised the question of just how much risk is being assumed by the U. S. Treasury with its apparent implied guaranty of the unsecured obligations of the major financial institutions. We asked whether the $188 Trillion (notional amount) of derivatives transactions on the books of four major banks (J. P. Morgan Chase, Bank of America, Citibank and Goldman Sachs) could potentially pose risks not fully understood by the banks or their regulators.
In evaluating the potential risks inherent in the derivatives positions of the banks (and more particularly at the risks of the Credit Default Swaps (“CDS”)), it is necessary to look at the one situation where similar risks have been converted to real losses: i.e. AIG Financial Products (AIG FP). Chris Whalen of Institutional Risk Analytics has done so in depth in a recent article posted here.
Mr. Whalen paints a picture of financial instruments created for the purpose of enabling financial as well as non-financial companies to falsify their earnings through the issuance of insurance contracts calculated to remove certain assets and liabilities from companies’ books and by doing so to bring them into compliance with regulatory capital requirements or shift earnings and losses between reporting period, with the presumed intent of manipulating the equity prices of the counterparties. He further asserts that these ostensibly “economic” transactions were converted to blatant fraud through side letters never disclosed to company management, auditors or regulators that absolved the writers of these contracts from responsibility for honoring their commitments. These activities are further described as the essence of the SEC’s charges against AIG in a Complaint brought against AIG in 2004. …”
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Read Full Post | Make a Comment ( 42 so far )President Barack Obama Puppet of Trilateral Commission?–Videos
The Trilateral Commission’s roots stem from the book Between Two Ages (16) written by Zbigniew Brzezinski in 1970. The following quotations from that book show how closely Brzezinski’s thinking parallels that of CFR founder Edward Mandell House.
On page 72, Brzezinski writes: “Marxism is simultaneously a victory of the external, active man over the inner, passive man and a victory of reason over belief.”
On page 83, he states: “Marxism, disseminated on the popular level in the form of Communism, represented a major advance in man’s ability to conceptualize his relationship to his world.”
And on page 123, we find: “Marxism supplied the best available insight into contemporary reality.”
Nowhere does Mr. Brzezinski tell his readers that the Marxism “in the form of Communism,” which he praises, has been responsible for the murder of approximately 100 million human beings in the Twentieth Century, has brought about the enslavement of over a billion more, and has caused want, privation and despair for all but the few criminals who run the communist-dominated nations.
On page 198, after discussing America’s shortcomings, Brzezinski writes: “America is undergoing a new revolution” which “unmasks its obsolescence.” We disagree; America is not becoming obsolete.
On page 260, he proposes “Deliberate management of the American future…with the…planner as the key social legislator and manipulator.” The central planning he wants for our country is a cardinal underpinning of communism and the opposite of the way things are done in a free country.
On page 296, Mr. Brzezinski suggests piecemeal “Movement toward a larger community of the developed nations…through a variety of indirect ties and already developing limitations on national sovereignty.” Here, we have the same proposal that has been offered by Richard Gardner in the CFR publication Foreign Affairs.
Brzezinski then calls for the forging of community links among the United States, Western Europe, and Japan; and the extension of these links to more advanced communist countries. Finally, on page 308 of his 309-page hook, he lets us know that what he really wants is “the goal of world government”. …”
http://www.bibliotecapleyades.net/sociopolitica/esp_sociopol_trilat02.htm
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“…Brzezinski was the author of the book Between Two Ages, which was published in 1970, in which he called for a new international monetary system, and it was considered to be the ‘Bible’ of the Trilateralists. On page 72, he said: “Marxism is simultaneously a victory of the external, active man over the inner, passive man and a victory of reason over belief.” He called for “deliberate management of the American future” (pg. 260), a “community of nations” (pg. 296), and a “world government” (pg. 308). He became its first Director (1973-76), drafted its Charter, and became its driving force.
Funding for the group came from David Rockefeller, the Charles F. Kettering Foundation, and the Ford Foundation.
In July, 1972, Rockefeller called his first meeting, which was held at Rockefeller’s Pocantico compound in New York’s Hudson Valley. It was attended by about 250 individuals who were carefully selected and screened by Rockefeller and represented the very elite of finance and industry.
Within a year, after their first full meeting of the Executive Committee in Tokyo, the Trilateral Commission, considered to be an off-shoot of the Bilderberg group, was officially initiated, holding biannual meetings. Because of a heavy cross-membership, some researchers have said that they appear to be an inner circle of the Council on Foreign Relations, with ties to the Atlantic Institute for International Affairs (established in 1961), and the Bilderberg Group.
The Trilateral Commission represents a union of experts and transnational elite from the three noncommunist industrial regions of the world: North America, Japan, and Western Europe (excluding Austria, Greece, and Sweden). Rockefeller saw the need for such a private consultation among these three democratic areas. With the demise of the Bretton Woods system, they believed an overhaul was needed. The theory was that America’s role should be diminished, and made equal to the Common Market [E.U.] and Japan, because together, the three represent 70% of the world’s trade. …”
http://www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=FinalWarn09-1
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Obama: Trilateral Commission Endgame
By Patrick Wood
“…According to official Trilateral Commission membership lists, there are only 87 members from the United States (the other 337 members are from other regions). Thus, in less than two weeks since his inauguration, Obama’s appointments encompass more than 12% of Commission’s entire U.S. membership.
Is this a mere coincidence or is it a continuation of dominance over the Executive Branch since 1976? (For important background, read The Trilateral Commission: Usurping Sovereignty.)
- Secretary of Treasury, Tim Geithner
- Ambassador to the United Nations, Susan Rice
- National Security Advisor, Gen. James L. Jones
- Deputy National Security Advisor, Thomas Donilon
- Chairman, Economic Recovery Committee, Paul Volker
- Director of National Intelligence, Admiral Dennis C. Blair
- Assistant Secretary of State, Asia & Pacific, Kurt M. Campbell
- Deputy Secretary of State, James Steinberg
- State Department, Special Envoy, Richard Haass
- State Department, Special Envoy, Dennis Ross
- State Department, Special Envoy, Richard Holbrooke
There are many other incidental links to the Trilateral Commission, for instance,
Secretary of State Hillary Clinton is married to Commission member William Jefferson Clinton.
Geithner‘s informal group of advisors include E. Gerald Corrigan, Paul Volker, Alan Greenspan and Peter G. Peterson, among others. His first job after college was with Henry Kissinger at Kissinger Associates.
Brent Scowcroft has been an unofficial advisor to Obama and was mentor to Defense Secretary Robert Gates.
Robert Zoelick is currently president of the
World Bank
Laurence Summers, White House Economic Advisor, was mentored by former Treasury Secretary Robert Rubin during the Clinton administration.
There are many other such links, but these are enough for you to get the idea of what’s going on here. …”
“…Conclusion
The Obama presidency is a disingenuous fraud. He was elected by promising to bring change, yet from the start change was never envisioned. He was carefully groomed and financed by the Trilateral Commission and their friends.
In short, Obama is merely the continuation of disastrous, non-American policies that have brought economic ruin upon us and the rest of the world. The Obama experience rivals that of Jimmy Carter, whose campaign slogan was “I will never lie to you.”
When the Democrat base finally realizes that it has been conned again (Bill Clinton and Al Gore were members), perhaps it will unleash a real political revolution that will oust Trilateral politicians, operatives and policies from the shores of our country.
If the reader is a Democrat, be aware that many Republicans and conservatives are still licking their wounds after finally realizing that George Bush and Dick Cheney worked the same con on them for a disastrous eight years of the same policies! …”
The return of the Trilateral undead
“…It’s not accidental that so many of the original members of the Trilateral Commission, all of whom are now well into their 80′s, have returned to dance in the limelight once again.
TC Members like Henry Kissinger, Zbigniew Brzezinski, Paul Volker and Brent Scowcroft, for instance. …”
“…So, now we have the mother of all crises and on a global scale at that: Financial, political, religious (remember Islam?).
And socialistic solutions are being railroaded through on a daily basis.
If the New World Order baby is about to be delivered, wouldn’t you expect the fathers (Kissinger, Brzezinski, Scowcroft, Volker, Rockefeller, et al) to show up and pace the floor?
Everybody figures that these guys are just crusty and harmless old men, but I will guarantee that when the baby is finally born the screaming will begin. …”
http://www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=FinalWarn09-1
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