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US Big 4 Derivatives exposure

According to the Comptroller of the Currency, four of the largest U.S. banks are walking a tightrope of risk, leverage and debt when it comes to derivatives.  Just check out how exposed they are…

JPMorgan Chase

Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)

Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)

Citibank

Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)

Bank Of America

Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)

Goldman Sachs

Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.

According to a Bank of International Settlements (BIS) Survey of Foreign Exchanges and Derivatives market activity in 2007
Derivatives Worldwide – $1,144 trillion ($1.144 quadrillion) consisting of:

Listed Credit Derivatives – $548 trillion

Over The Counter (OTC) Derivatives – $596 trillion

The OTC derivatives consist of the following

  • Interest rate derivatives – $393 trillion
  • Credit default swaps – $58 trillion
  • Foreign Exchange derivatives – $56 trillion
  • Commodity derivatives – $9 trillion
  • Equity linked derivatives – $8.5 trillion
  • Unallocated derivatives – $71 trillion

Bear in mind the UK economy was valued at $2.72 trillion in 2011 and derivatives are nothing more than a glorified gamble.

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