BUSTED: Bailed Out Banks HID $400 Billion In Derivatives Exposure From Regulators
Bailed out Blankfein's $41 million Hamptons pad.
Transparency piece from the Financial Times this morning. The $400 Bilsky figure is just for Q1 of '09. BIS hasn't gotten around to the other nine months of lies.
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As many as five US banks failed to report hundreds of billions of dollars in credit derivatives bought from foreign counterparties during 2009, leaving those risks below the radar of regulators in the US and Europe.
The banks’ underreported exposures to credit default swaps came to light as the US Federal Reserve and the Bank for International Settlements were preparing first-quarter reports of the industry’s lending and risk activities. It was revealed as a footnote to the BIS report’s lengthy tables.
The BIS became alarmed at the discrepancy, according to one official familiar with the report.
“This underscores how little transparency there was and how much information was missing,” said one BIS official familiar with the report.
The missing exposures came from a group of financial institutions that were hastily granted bank holding company status in 2008 as panic engulfed the world’s financial system. The rapid conversion to bank status allowed them to borrow cash from the Fed, if needed, as liquidity threatened to dry up.
The mishap underlines how the conversion also introduced those companies to a raft of complex bank reporting standards, and raises new questions on the lack of scrutiny they faced under previous regulators.
The Fed, following a review of its quarterly report on cross-border risks, discovered that the group, which included Goldman Sachs, Morgan Stanley, American Express and CIT, only submitted claims on credit derivatives up to the amount where there was a corresponding position to hedge against. The additional risks, which totalled $400bn in the first quarter, were left out.
Jul 26, 2010 at 2:17 PM
Reader Comments (7)
THE MARGIN OF ERROR ALONE IN THE CALCULATION OF GLOBAL DERIVATIVE BAILOUT EXPOSURE IS SUBSTANTIALLY LARGER THAN THE TOTAL GROSS ANNUAL DOMESTIC PRODUCT OF THE WORLD.
(repeat, and allow to sink in)
This article is disgusting, but half a trillion is a mere pimple on the ass of the elephant in the room. Some may challenge my calculations...good luck with that ... read it and weep.
http://letthemfail.us/archives/2963
Wall Street finds a foreign detour around U.S. derivatives rules
http://www.reuters.com/article/2012/12/02/us-banks-regulation-derivatives-idUSBRE8B10F220121202
[snip]
U.S. banks such as Morgan Stanley (MS.N) and Goldman Sachs (GS.N) have been explaining to their foreign customers that they can for now avoid the new rules, due to take effect next month, by routing trades via the banks' overseas units, according to industry sources and presentation materials obtained by Reuters.
http://www.nakedcapitalism.com/2013/05/banks-win-big-as-regulators-refuse-to-rein-in-700-trillion-derivatives-market.html
Banks Win Big as Regulators Refuse to Rein in $700 Trillion Derivatives Market
http://www.nakedcapitalism.com/2013/05/banks-win-big-as-regulators-refuse-to-rein-in-700-trillion-derivatives-market.html
A bit about derivatives. (will be adding a few more links)...
http://fpc.state.gov/documents/organization/8038.pdf (must read)
http://www.nytimes.com/2002/02/09/business/enron-s-many-strands-politics-enron-preaching-deregulation-worked-statehouse.html
"In the 2000 election cycle alone, Enron gave $1.1 million to local candidates: as little as $250 to $500 in hundreds of districts, as much as $10,000 to influential state legislators in California and other big states."
http://www.nytimes.com/2001/11/29/business/enron-s-collapse-the-derivatives-market-that-deals-in-risks-faces-a-novel-one.html
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You need to cut and paste this:
A Brief History of Derivatives
into your browser and click on it. It is an amazing history of derivatives.
http://www.nakedcapitalism.com/2013/05/banks-win-big-as-regulators-refuse-to-rein-in-700-trillion-derivatives-market.html
More on derivatives during the formative years of ENRON (must read)
http://fpc.state.gov/documents/organization/8038.pdf
More here:
http://www.nytimes.com/2002/02/09/business/enron-s-many-strands-politics-enron-preaching-deregulation-worked-statehouse.html
"In the 2000 election cycle alone, Enron gave $1.1 million to local candidates: as little as $250 to $500 in hundreds of districts, as much as $10,000 to influential state legislators in California and other big states."
http://www.nytimes.com/2001/11/29/business/enron-s-collapse-the-derivatives-market-that-deals-in-risks-faces-a-novel-one.html
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You need to copy and paste this into your browser, then click on it. It is an amazing history of derivatives. I strongly recommend taking a moment to do so.
A Brief History of Derivatives
Remember, derivatives encompass everything .