While you guys are busy watching the media turn some deaths into a race war

ElderGOD · December 9, 2014, 5:23am

… you should not forget about what’s happening this week:

If the quadrillion dollar derivatives bubble implodes, who should be stuck with the bill? Well, if the “too big to fail” banks have their way it will be you and I. Right now, lobbyists for the big Wall Street banks are pushing really hard to include an extremely insidious provision in a bill that would keep the federal government funded past the upcoming December 11th deadline.

This provision would allow these big banks to trade derivatives through subsidiaries that are federally insured by the FDIC.

What this would mean is that the big banks would be able to continue their incredibly reckless derivatives trading without having to worry about the downside. If they win on their bets, the big banks would keep all of the profits.

If they lose on their bets, the federal government would come in and bail them out using taxpayer money. In other words, it would essentially be a “heads I win, tails you lose” proposition.

Just imagine the following scenario. I go to Las Vegas and I place a million dollar bet on who will win the Super Bowl this year. If I am correct, I keep all of the winnings. If I lose, federal law requires you to bail me out and give me the million dollars that I just lost.

Does that sound fair?

Of course not! In fact, it is utter insanity. But through their influence in Congress, this is exactly what the big Wall Street banks are attempting to pull off. And according to the Huffington Post, there is a very good chance that this provision will be in the final bill that will soon be voted on…
    According to multiple Democratic sources, banks are pushing hard to include the controversial provision in funding legislation that would keep the government operating after Dec. 11. Top negotiators in the House are taking the derivatives provision seriously, and may include it in the final bill, the sources said. 
Sadly, most Americans don’t understand how derivatives work and so there is very little public outrage.

But the truth is that people should be marching in the streets over this. If this provision becomes law, the American people could potentially be on the hook for absolutely massive losses…
    The bank perks are not a traditional budget item. They would allow financial institutions to trade certain financial derivatives from subsidiaries that are insured by the Federal Deposit Insurance Corp. - potentially putting taxpayers on the hook for losses caused by the risky contracts. 
This is not the first time these banks have tried to pull off such a coup. As Michael Krieger of Liberty Blitzkrieg has detailed, bank lobbyists tried to do a similar thing last year…
Five years after the Wall Street coup of 2008, it appears the U.S. House of Representatives is as bought and paid for as ever. We heard about the Citigroup crafted legislation currently being pushed through Congress back in May when Mother Jones reported on it. Fortunately, they included the following image in their article:  


Unsurprisingly, the main backer of the bill is notorious Wall Street lackey Jim Himes (D-Conn.), a former Goldman Sachs employee who has discovered lobbyist payoffs can be just as lucrative as a career in financial services. The last time Mr. Himes made an appearance on these pages was in March 2013 in my piece: Congress Moves to DEREGULATE Wall Street. 
Fortunately, it was stopped in the Senate at that time.

But that is the thing with bank lobbyists. They are like Terminators - they never, ever, ever give up.

And they now have more of a sense of urgency then ever, because we are moving into a period of time when the big banks may begin losing tremendous amounts of money on derivatives contracts.

For example, the rapidly plunging price of oil could potentially mean gigantic losses for the big banks. Many large shale oil producers locked in their profits for 2015 and 2016 through derivatives contracts when the price of oil was above $100 a barrel. As I write this, the price of oil is down to $65 a barrel, and many analysts expect it to go much lower.

So guess who is on the other end of many of those trades?

The big banks.

Their computer models never anticipated that the price of oil would fall by more than 40 dollars in less than six months. A loss of 40, 50 or even 60 dollars per barrel would be catastrophic.

No wonder they want legislation that will protect them.

And commodity derivatives are just part of the story. Over the past couple of decades, Wall Street has been transformed into the largest casino in the history of the world. At this point, the amounts of money that these “too big to fail” banks are potentially on the hook for are absolutely mind blowing.

As you read this, there are five Wall Street banks that each have more than 40 trillion dollars in exposure to derivatives. The following numbers come from the OCC’s most recent quarterly report (see Table 2)…

JPMorgan Chase

Total Assets: $2,520,336,000,000 (about 2.5 trillion dollars)

Total Exposure To Derivatives: $68,326,075,000,000 (more than 68 trillion dollars)

Citibank

Total Assets: $1,909,715,000,000 (slightly more than 1.9 trillion dollars)

Total Exposure To Derivatives: $61,753,462,000,000 (more than 61 trillion dollars)

Goldman Sachs

Total Assets: $860,008,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $57,695,156,000,000 (more than 57 trillion dollars)

Bank Of America

Total Assets: $2,172,001,000,000 (a bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $55,472,434,000,000 (more than 55 trillion dollars)

Morgan Stanley

Total Assets: $826,568,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $44,134,518,000,000 (more than 44 trillion dollars)

Those that follow my website regularly will note that the derivatives exposure for the top four banks has gone up significantly since I last wrote about this just a few months ago.

Do you want to be on the hook for all of that?

Keep in mind that the U.S. national debt is only about 18 trillion dollars at this point.

So why in the world would we want to guarantee losses that could potentially be far greater than our entire national debt?

Only a complete and utter fool would financially guarantee these incredibly reckless bets.

Please contact your representatives in Congress and tell them that you do not want to be on the hook for the derivatives losses of the big Wall Street banks.

When this derivatives bubble finally implodes and these big banks go down (and they inevitably will), we do not want them to take down the rest of us with them.

ElderGOD · December 9, 2014, 5:29am

I’m just waiting for Barack to grow some balls, kick a door down, and tell them to GTFO with that bullshit.

Oerba · December 9, 2014, 5:34am

Are there no online versions of this bill? I thought they uploaded this kind of stuff online. The article doesn’t state the number or title of it either:/

Shinkuu_Tatsumaki · December 9, 2014, 5:38am

TL DR.

Street Fighter has taught me to not complain and just adapt. So I’ve taken that into life and so whatever the hell this law does, fuck it.

ElderGOD · December 9, 2014, 5:42am

Well, we have this info from the previous attempt:

Obligatory @Serpent‌

NickRocks · December 9, 2014, 5:47am

Obama is the banks bitch tho

pedoviejo · December 9, 2014, 7:33am

This is Fucked up aristocratic socialism. These people deserve the firing squad.

Why should the people have to pay for such reckless recourse.

Rhio2k · December 9, 2014, 8:09am

Obama’s administration is all lies and deception. They don’t want anyone knowing the shit they’re pulling until it’s too late.

SoVi3t · December 9, 2014, 8:18am

Excellent, the revolution I so desperately crave gets closer and closer…

Rick_Ross · December 9, 2014, 8:27am

12/11 never forget

regulate · December 9, 2014, 9:18am

Unless one of them actually fails, i doubt this will pass. the fact that this is being brought up again means that that one or more will fail. prolly soon ala lehman bros. derivatives were always a time bomb. i swear its like they come up with these crazy schemes and nobody checks these guys cause the money is so good. wish i had gotten in on it.

Rioting_Soul · December 9, 2014, 9:42am

So, how much more will be coming out of my taxes? Around $100,000-ish?

Chachi · December 9, 2014, 9:48am

What’s to stop these banks from up and moving to China if they don’t get their way?

Serpent · December 9, 2014, 10:10am

Why would Obama have a problem with this? His best buddies are bankers. If you’re in NYC you know he rolls in every once in awhile, they shut down a couple of streets, and he and his banker buddies have these big dinners where you have to pay $1000 a plate minimum, usually higher than that $10k even $100k dinners. Jaime Daimon is an open Democrat, and so is pretty much every other banker. They adore Obama and the liberal big government system because it guarantees them big profits to process all of it, and because they keep getting backstopped.

I’m not involved with any of this shit anymore. I’ve given up caring and I’ve also moved on. I’ll probably take the payoffs if I get contacted again for it, but I sort of doubt that’s going to happen. These fucks will do what they want and no matter what anyone tries to tell the public, the general public would rather side with these guys anyway.

Just get your real assets while you can and prepare an escape plan at worst case. If you ratchet down your consumer spending it doesn’t even really matter, although most of us live in crappy areas where we can’t live off the land like we’d really need to. There is a reason why cities only very recently had a higher population that rural areas, it’s because when there isn’t this artificial economic system working well, you’re better off at least having your own land to grow food on, and your own well to get water out of.

Rick_Ross · December 9, 2014, 10:34am

I like how Serpent puts the blame on libs+dems, even though the cons+repubs are just as guilty (if not, more) of sucking up to the Ashkenazi Banking Oligarchy. Not to mention that most conservatives share this strange Evangelical belief, where Jesus will descend from the heavens and slay everyone with his magical sword if Israel and the bankers don’t get their way.

But I digress…

Spoiler

or do I?

SoVi3t · December 9, 2014, 10:36am

@Chachi‌ what’s to stop them? Probably the fact their customers are here… And it is their money they are holding onto.

What worries me about this news, is nobody is reporting it, except the crazy fringe sites that claim Obama wants to eat your children to gain their knowledge

Serpent · December 9, 2014, 11:06am

I don’t disagree, but the Dems have been in power for a long time now, so of course I will point to them. In reality you’re right if the GOP does get power the banks will just switch right back, and I didn’t know we were allowed to put those three forbidden words together and get away with it, but you’re right on that count too.

I was just disputing ElderGod’s delusion that Obama would save anybody from these bankers.

For that last sentence, iirc it’s because when Jews get slaughtered in Israel then Jesus is supposed to come down and make a new kingdom of Peace. There are some signs before that as well, like rebuilding the Temple on the Mount, a 7 year peace treaty with Israel and a united Empire of 10 regions/kingdoms that will be “mixed iron and clay.” But you really don’t want to make this a religious thread so I’ll stop there lol.

I do not actually think these people are actually religious however. They are using it as justification for their wealth and power hoarding schemes. In what religion are you told to steal from the public at large, oppress them, and accumulate vast amounts of wealth while murdering as many people as you can? Maybe Satanism, certainly not Judeo-Christian beliefs.

crucades · December 9, 2014, 11:12am

Shit Serpent the first chapter in the tanakh explicitly says, “go fourth my khaarnite brethen and steal all the gold from the humans and make wars so they kill each other and we can rob the land too. Blood for the Blood God!”

I agree with both you and Rick, you yankees are getting played pretty hard by the politicians but the biggest problem is US only has 2 parties lol, so democracy is pointless when both these assholes lie, cheat and pretty much get backed by the same dudes.

Missing_Person · December 9, 2014, 11:30am

lol expecting Obama to do anything.

pedoviejo · December 9, 2014, 1:14pm

What are some real solutions to this issue? How do you convince Americans that they are retards and need to start thinking diffrently.