Derivative Death Star

Why is the dollar cratering? And why is the Obama administration so silent on this point?

Both of these can be answered by a report from the Office of the Comptroller of the Currency (OCC). According to the latest figures Wall Street banks are so hugely levered to interest rate swaps that if the dollar rises it will trigger the derivative death star.

According to the report these same banks are still hugely levered a year after the crisis.

  • JPM $1.6T in assets $80T in derivative exposure, $51T in interest rate swaps.
  • Goldman Sachs $0.1T in assets $40T in derivative exposure, $34T in interest rate swaps.
  • BofA $1.4T in assets $39T in derivative exposure, $27T in interest rate swaps.
  • Citi $1.1T in assets $32T in derivative exposure, $17T in interest rate swaps.

How can this still exist after all the talk of ramping down risk/

It’s simple, the banks have the backing of Uncle Sam to bet against the greenback to rebuild their balance sheets.

For more on Wall and Washington and the economy see: https://mgray12.wordpress.com

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