Sunday, September 25, 2011

Weekend wrap-up

There are many headlines out of Europe tonight that I'll let you try to decipher if you're really bored.  In general, the thinking seems to be European leaders will piece together some sort of bailout (n+1) and that will stabilize Europe for at least 4 hours - @sarcasm.

The Office of the Comptroller of the Currency publishes a little read report on Bank Trading and Derivatives and page 14 of that report sort of jumps off the page at me.  Remember way back in 2008 during the financial crisis when 1 or 2 banks triggered a threat to the entire banking system because of the concentration of risk?  Yeah, well apparently you and I are the only ones that remember that because the concentration of risk in derivatives is higher than ever.

The top 4 banks - JPMorgan, Citibank, Bank of America and Goldman represent 96% of the outstanding US derivatives exposure principally in those dangerous CDS. 


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