Tuesday, January 27, 2009

Warning: Mega-banks Could Fail Despite Federal Bailouts

This is a scary article by Martin Weiss, found here on Market Oracle. 

A few excerpts are worth noting below: 

"Fact #3. Big derivatives players. Bank of America and Citigroup are the nation's second and third largest high-rollers in the derivatives market, with a combined total of $78 trillion in these bets outstanding. That's over ten times the derivatives that Lehman Brothers had on its books when it failed last year.

Fact #4. They've bet far too much on each other's failure. Bank of America and Citigroup are also the second and third largest participants in the most dangerous derivatives of all — credit default swaps. These are the big bets that financial institutions make on the failure of other major companies

Total between the two: An astounding $5.8 trillion!

Fact #6. JPMorgan Chase's derivatives could double the size of the banking crisis overnight. On the day that JPMorgan Chase needs to join the ailing Bank of America and Citigroup in Uncle Sam's intensive care unit, the derivatives mess doubles immediately.  

Reason: The bank has $9.2 trillion in credit default swaps, almost twice as much as Bank of America and Citigroup combined."

Excerpt taken from 

"Warning: Mega-banks Could Fail Despite Federal Bailouts" by Martin Weiss on www.marketoracle.org

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