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Reply #95: It's not good...but not as bad as that [View All]

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econoclast Donating Member (259 posts) Send PM | Profile | Ignore Wed Oct-19-11 11:34 AM
Response to Reply #74
95. It's not good...but not as bad as that
Edited on Wed Oct-19-11 11:36 AM by econoclast
The FDIC insures DEPOSITORS up to something like 250,000 per accountholder

So the FDIC Would be on the hook for that and nothing more even in a worst case scenario. The FDIC insures the deposits not the bank.

Other points. The giant multiple trillion dollar number is hokum. It is the "notional value" of the derivatives NOT the potential risk. Easy example. Options are derivatives. Suppose I buy a call option on 1,000,000 Greek bonds. I think I'll profit if Greece doesn't default. I pay 1,000 dollars for the option. OK. What is my risk? The 1,000 I paid for the option. If the market doesn't go my way the options expire worthless and I lost 1,000 dollars. But what is the @notional value " of this derivative contract ? 1,000,000. The value of the securities underlying the derivative.

So the "notional value" is really a meaningless number that conveys ZERO information about the actual risk.

Which is not to say the risk is small. We just don't know and the "notional value" number dies nothing to make the picture any clearer.
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  -HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades Donnachaidh  Oct-18-11 03:01 PM   #0 
  - K&R n/t  OhioChick   Oct-18-11 03:04 PM   #1 
  - K&R. If the devil has a face, he looks like these two fuckers:  Devil_Fish   Oct-19-11 04:09 AM   #51 
     - Fucking Ken Lewis. Whose the guy from ML? I can't remember. nt  Ilsa   Oct-19-11 06:13 AM   #55 
     - That's John Thain CEO of Merrill Lynch  tularetom   Oct-19-11 08:07 AM   #63 
        - After I posted I remembered that he was  Ilsa   Oct-19-11 10:48 AM   #76 
        - really REALLY bad  xxqqqzme   Oct-19-11 11:22 AM   #88 
           - Yeah...  chervilant   Oct-19-11 11:36 AM   #98 
     - OH, AND BTW...FIRED BofA EXECS GET $11M GOLDEN HANDSHAKE (ur photo reminded me)  cyberpj   Oct-19-11 12:03 PM   #108 
     - We need to make it legal to shoot those scumbags on sight.  LiberalFighter   Oct-19-11 12:24 PM   #114 
  - That explains why their stock is up 11% today  DJ13   Oct-18-11 03:05 PM   #2 
  - As a taxpayer, I do not agree to that arrangement..  kentuck   Oct-18-11 03:06 PM   #3 
  - Unfortuantely, in an oligarchy, what an individual cares about doesn't matter  truedelphi   Oct-19-11 02:25 AM   #40 
  - It's more like "what 99% of the population cares about doesn't matter"  Amonester   Oct-19-11 10:48 AM   #77 
  - Makes a person wonder why he keeps paying his taxes..  russspeakeasy   Oct-19-11 10:54 AM   #79 
  - Are you in the 1% Kentuck? If not, nobody cares whether you agree with that  TBF   Oct-19-11 12:04 PM   #109 
  - And they wonder why --  Hell Hath No Fury   Oct-18-11 03:06 PM   #4 
  - If this goes through I predict there will be more in the streets. This is  jwirr   Oct-19-11 10:54 AM   #80 
  - No! No! No! No! A thousand times, No!  Nuclear Unicorn   Oct-18-11 03:11 PM   #5 
  - I warned about this here weeks ago and got mocked  Katashi_itto   Oct-18-11 03:12 PM   #6 
  - Everyone here gets mocked from time to time. It's a right of passage at DU.  Cannikin   Oct-18-11 04:03 PM   #15 
  - If you're being mocked here  Hydra   Oct-18-11 06:08 PM   #28 
  - I did not see it or I would have supported you.  aquart   Oct-19-11 04:05 AM   #49 
  - I missed it too  bananas   Oct-19-11 07:18 AM   #58 
  - Welcome to DU! nt  bananas   Oct-19-11 07:20 AM   #59 
  - Being Cassandra is not for the meek!  MannyGoldstein   Oct-19-11 08:35 AM   #68 
  - Speaking of Cassandra...  chervilant   Oct-19-11 11:56 AM   #105 
     - A lady I very much admire -  TBF   Oct-19-11 12:12 PM   #112 
  - Well, a post against police brutality was just unrecced,  woo me with science   Oct-26-11 12:03 AM   #156 
     - .  woo me with science   Oct-26-11 12:38 AM   #157 
  - My stomach turns...  kentuck   Oct-18-11 03:13 PM   #7 
  - Only if they meekly accept it!  Moostache   Oct-19-11 12:40 PM   #116 
  - This is probably a dumb question...  BrendaBrick   Oct-18-11 03:33 PM   #8 
  - These are likely credit default swaps on Euro bonds which have no relation to deposit insurance.  dkf   Oct-18-11 11:09 PM   #37 
     - That would make sense  BrendaBrick   Oct-19-11 11:29 AM   #91 
  - Tell me again why getting rid of Glass-Steagall was a good idea??  KamaAina   Oct-18-11 03:37 PM   #9 
  - There's not a major bank owner out there that  truedelphi   Oct-19-11 02:26 AM   #41 
  - A few people got obscenely wealthy as a result.  Enthusiast   Oct-19-11 05:08 AM   #52 
  - That few people might probably include pol$ and lobbyi$t$ too.  Amonester   Oct-19-11 10:53 AM   #78 
  - Why don't we ask Bill Clinton?  jwirr   Oct-19-11 10:59 AM   #82 
  - Tell me again why re-instating Glass-Steagall with updates...  bvar22   Oct-19-11 11:08 AM   #85 
     - "It wouldn't have been prudent."  Enthusiast   Oct-19-11 11:52 AM   #104 
     - Because it would have kept B of A from buying Merrill in the first place  Recursion   Oct-19-11 02:02 PM   #124 
     - It wouldn't have been possible  jmowreader   Oct-19-11 02:48 PM   #132 
     - held  DonCoquixote   Oct-22-11 06:10 PM   #151 
     - +1000000 nt  woo me with science   Oct-22-11 06:21 PM   #152 
  - And not a penny for my company.  Octafish   Oct-18-11 03:38 PM   #10 
  - This just disgusts me.  closeupready   Oct-18-11 03:40 PM   #11 
  - ...and that's just one bank  librechik   Oct-18-11 03:44 PM   #12 
  - K&R  CrispyQ   Oct-18-11 04:00 PM   #13 
  - Silly number for shock value  dmallind   Oct-18-11 04:01 PM   #14 
  - That might be true normally  Hydra   Oct-18-11 06:15 PM   #29 
  - Very nice, concise and precise description of how badly we are being  truedelphi   Oct-19-11 02:50 AM   #46 
  - I'm going to catch hell for this because as a former banker I know what I suggest.  Chan790   Oct-19-11 09:21 AM   #73 
  - I see what you are saying,. In Naomi Klein's book Disaster Capitalism  jwirr   Oct-19-11 11:10 AM   #86 
  - I don't think so, but I can't say that for sure.  Chan790   Oct-19-11 11:35 AM   #96 
     - Plus I suspect that the same types of people now inside the Big Banks will  truedelphi   Oct-19-11 02:54 PM   #135 
  - But the banks and stockholders are all that matters. "Public support", not so much.  riderinthestorm   Oct-19-11 11:23 AM   #89 
  - Why are the banks still insured under FDIC?  a simple pattern   Oct-19-11 02:02 PM   #123 
  - Because if they weren't...  Chan790   Oct-19-11 02:10 PM   #127 
     - I just find it interesting that they're still allowed to have the FDIC sticker on the door,  a simple pattern   Oct-19-11 03:06 PM   #139 
        - They sent regulators around to make sure we'd put up the new stickers and took down the old ones.  Chan790   Oct-19-11 03:23 PM   #141 
  - I'll be going off for a while to ponder on all this.  truedelphi   Oct-19-11 02:52 PM   #134 
  - Agreed.  a simple pattern   Oct-19-11 01:57 PM   #122 
  - they should have just nationalized the "too big to fail"  newspeak   Oct-19-11 02:18 PM   #130 
  - But they don't hire us as workers. They do reward themselves with bonuses.  aquart   Oct-19-11 04:08 AM   #50 
  - And if they manage to crash the world economy with this move won't  jwirr   Oct-19-11 11:02 AM   #83 
  - If we get to that level, "backstopping" by anything would be moot  dmallind   Oct-19-11 11:36 AM   #99 
  - Not quite...  chervilant   Oct-19-11 12:00 PM   #106 
  - I've really had enough.  City Lights   Oct-18-11 04:09 PM   #16 
  - Greed is Good.  SammyWinstonJack   Oct-19-11 08:42 AM   #70 
  - Thank you. I thought I was  xxqqqzme   Oct-19-11 11:31 AM   #92 
  - My sentiments exactly,  chervilant   Oct-19-11 05:36 PM   #148 
  - K&R  Eyerish   Oct-18-11 04:11 PM   #17 
  - K&R n/t  myrna minx   Oct-18-11 04:11 PM   #18 
  - OWS has shown us that a new world is possible. But we must first  coalition_unwilling   Oct-18-11 04:13 PM   #19 
  - Ninety nine percent of all humans actually are in, though some  truedelphi   Oct-19-11 02:28 AM   #42 
  - "That we here highly resolve that these  coalition_unwilling   Oct-19-11 02:47 AM   #44 
     - Amen, coaliton_unwilling, Amen. n/t  truedelphi   Oct-19-11 02:56 AM   #47 
  - This is why the right wing is desperate to draw the attention away from Wall Street  myrna minx   Oct-19-11 05:25 AM   #53 
  - I don't think we have m much choice - when it comes down all by itself  jwirr   Oct-19-11 11:19 AM   #87 
  - unRec for falsehood. Only the bank's deposits are guaranteed by the FDIC  banned from Kos   Oct-18-11 04:14 PM   #20 
  - Quite correct  econoclast   Oct-18-11 04:32 PM   #21 
  - With what money?  truedelphi   Oct-19-11 02:48 AM   #45 
  - In a worst case scenario, the deposits will be used to pay off..  girl gone mad   Oct-19-11 02:07 PM   #125 
  - You have a reading comprehension problem.  girl gone mad   Oct-18-11 04:39 PM   #22 
  - The Bloomberg story does not say "$53T is backstopped" or you would quote it  banned from Kos   Oct-18-11 04:50 PM   #23 
  - You're persistently wrong, but you are persistent.  girl gone mad   Oct-18-11 05:06 PM   #27 
     - Ridiculous. You know I never doubted the existence of the derivatives  banned from Kos   Oct-18-11 06:22 PM   #31 
        - Taxpayers are now the backstop via the FDIC.  girl gone mad   Oct-18-11 07:11 PM   #33 
  - No reading comprehension on my side  econoclast   Oct-18-11 04:51 PM   #24 
  - after the depositors money's paid out on the losses, the FDIC  elehhhhna   Oct-18-11 06:20 PM   #30 
  - The deposits will be used to pay off the credit default swaps.  dkf   Oct-18-11 11:14 PM   #39 
  - You missed to point: they are transferring those derivatives into  jwirr   Oct-19-11 11:24 AM   #90 
  - Wait until this news hits the OWS groups.  L0oniX   Oct-18-11 04:53 PM   #25 
  - I can just smell the tar heating up across the planet already.  Hubert Flottz   Oct-18-11 04:55 PM   #26 
  - Got oil?  KansDem   Oct-19-11 11:34 AM   #94 
  - So these guys get to print their own money to benefit  felix_numinous   Oct-18-11 07:04 PM   #32 
  - So sick of this crap......Sick and mad as hell. nt  nc4bo   Oct-18-11 07:16 PM   #34 
  - k&r  Starry Messenger   Oct-18-11 07:22 PM   #35 
  - You knew this was going to happen Americans are going  lovuian   Oct-18-11 07:46 PM   #36 
  - They're not even hiding this BS anymore! BofA will openly fuck our citizens to our faces!  FarLeftFist   Oct-18-11 11:13 PM   #38 
  - fucked up beyond imagination - but what is not, these days?  inna   Oct-19-11 02:34 AM   #43 
  - K&R  DeSwiss   Oct-19-11 02:57 AM   #48 
  - holy crap  Locrian   Oct-19-11 06:10 AM   #54 
  - But............but..........  HowHeThinks   Oct-19-11 06:29 AM   #56 
  - But if we don't make some serious changes, it would all go down anyway.  nc4bo   Oct-19-11 07:27 AM   #60 
  - K & R  AzDar   Oct-19-11 06:50 AM   #57 
  - The Fed doesn't use taxpayer money  Recursion   Oct-19-11 07:58 AM   #61 
  - FDIC is involved here  KurtNYC   Oct-19-11 08:08 AM   #64 
  - They're moving some non-proprietary derivatives trading to the retail unit  Recursion   Oct-19-11 08:18 AM   #66 
     - yup, let the retailer=main street PAY AGAIN&AGAIN&AGAIN  katty   Oct-19-11 01:30 PM   #119 
  - The Fed is in favor of this but they are not the ones the money comes  jwirr   Oct-19-11 11:38 AM   #101 
  - The Fed involvement is the window, which they'll only do to the retail arm  Recursion   Oct-19-11 11:46 AM   #103 
  - Taxpayers backstop the Fed.  girl gone mad   Oct-19-11 03:50 PM   #142 
     - I make the opposite point  Recursion   Oct-19-11 03:54 PM   #143 
        - You are wrong.  girl gone mad   Oct-19-11 04:08 PM   #146 
  - Sitting on the beach, it suddenly got dark...  Javaman   Oct-19-11 08:06 AM   #62 
  - Ball is in the depositors' court now  econoclast   Oct-19-11 08:11 AM   #65 
  - You know I don't think I would feel as angry about these bailouts if only  Drale   Oct-19-11 08:33 AM   #67 
  - How does this happen? Oh yeah, money changers at the helm  AllyCat   Oct-19-11 08:35 AM   #69 
  - What a great time to break up the banks!  kentuck   Oct-19-11 08:43 AM   #71 
  - IMO. the B of A knows that their banks are in big trouble.  dotymed   Oct-19-11 09:20 AM   #72 
  - I need to be sure I understand this.  sulphurdunn   Oct-19-11 09:45 AM   #74 
  - It's not good...but not as bad as that  econoclast   Oct-19-11 11:34 AM   #95 
     - Thanks  sulphurdunn   Oct-19-11 02:08 PM   #126 
  - to all the bullshit Federal Reserve apologists/dupes out there... a big " I TOLD YOU SO"  stockholmer   Oct-19-11 10:32 AM   #75 
  - Agree. But there is always an excuse. Look for "but those things you are backstopping are...  Safetykitten   Oct-19-11 10:55 AM   #81 
     - No, REALLY, they are ...!  Aerows   Oct-19-11 12:09 PM   #110 
  - Wait for the hand waving  Aerows   Oct-19-11 11:06 AM   #84 
  - Off with their heads nt  flamingdem   Oct-19-11 11:34 AM   #93 
  - Ditch BofA. They need to be allowed to fail. And these transfers need to be reversed.  kestrel91316   Oct-19-11 11:36 AM   #97 
  - Oh, this must be because the Federal Reserve is a govt institution, beholden to the citizenry & not  WinkyDink   Oct-19-11 11:37 AM   #100 
  - 75 Trillion!?  freethought   Oct-19-11 11:42 AM   #102 
  - As I said above ...  econoclast   Oct-19-11 12:12 PM   #111 
     - You are exactly right of course. But a good Conspiracy Theory travels 1000x  banned from Kos   Oct-19-11 01:37 PM   #121 
     - Oh great it's only going to be 37 trillion what a relief!  RegieRocker   Oct-19-11 03:09 PM   #140 
     - quick peek at Google  econoclast   Oct-19-11 04:03 PM   #144 
        - Can you say Derivatives?  RegieRocker   Oct-19-11 04:07 PM   #145 
        - OK this was easy to find  econoclast   Oct-19-11 04:12 PM   #147 
     - You, Nor I, Nor Anyone Else Knows The True Cost of BofA's Liabilities  Yavin4   Oct-19-11 08:57 PM   #149 
  - Did I not say that Greece is simply foreshadowing of what will happen here?  TBF   Oct-19-11 12:03 PM   #107 
  - Even the right is against this  Aerows   Oct-19-11 12:19 PM   #113 
  - Federal Reserve Now Backstabbing American Taxpayers Once Again!  benld74   Oct-19-11 12:25 PM   #115 
  - The looting continues.  Fuddnik   Oct-19-11 01:08 PM   #117 
  - Fed Protecting?! hah! I think not!! ...result of no safety: OWS  katty   Oct-19-11 01:30 PM   #118 
  - Where is Oliver North when you need him?  izquierdista   Oct-19-11 01:34 PM   #120 
  - I'm thinking that the banks need to be backed by the CEO's  ut oh   Oct-19-11 02:12 PM   #128 
  - and everyone of those damn repug candidates  newspeak   Oct-19-11 02:14 PM   #129 
  - everybody needs to get their money OUT of these institutions  Celebration   Oct-19-11 02:23 PM   #131 
  - Just say NO!  Fire Walk With Me   Oct-19-11 02:50 PM   #133 
  - Lay down and take it like a good citizen!  RegieRocker   Oct-19-11 02:55 PM   #136 
  - K&R (n/t)  a2liberal   Oct-19-11 02:56 PM   #137 
  - Wow -- what a fuckin' DEAL-I-O!  Blue Owl   Oct-19-11 03:00 PM   #138 
  - K  elocs   Oct-22-11 05:37 PM   #150 
  - K&R  woo me with science   Oct-22-11 06:22 PM   #153 
  - The Bankers and Wall street crowd run this country, they will never be allowed to fail.  sarcasmo   Oct-22-11 07:21 PM   #154 
  - What a damned shame this is! n/t  The Northerner   Oct-25-11 11:24 PM   #155 
  - They will continue until we stop them.  woo me with science   Oct-26-11 12:42 AM   #158 
  - KICK!  burrowowl   Oct-26-11 01:39 AM   #159 

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