Community | October 20, 2011 | 77 comments

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades (WELL AMOUNT UNKNOWN COULD END UP BEING ALL OF EUROPE)

source: http://tinyurl.com/3ovf6ze

This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.
This means that the investment bank's European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.
This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.
What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.
http://tinyurl.com/3ovf6ze
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77 comments // HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades (WELL AMOUNT UNKNOWN COULD END UP BEING ALL OF EUROPE)

  • ReMarker
    • +2
      ReMarker  

    • This post is bunk. Post the link to the Bloomberg article if there is a Bloomberg article. My search of Bloomberg's site yielded NOTHING about no stinking $75 trillion dollars.

      FYI, the total net wealth of the United States is about $55 trillion.

    • 7 months ago
  • Sparky2U
  • Mark701
    • 0
      Mark701  
    • ReMarker:

      The link to the Bloomberg Article is at the link included by the poster. With regard to the "wealth" of the US, how are you defining it? We hold about a half trillion in gold, everything else is just paper. Derivatives are the worst kind of paper because they are nothing more than insured bets. If the derivative makes money the investor makes out. If the derivative loses money, insurance pays off the derivative holders. The problem is that there are is excess of 70 trillion in bad derivative paper that's been insured. That means someone has to pay the investors off if the derivatives sour. My question is what can they possibly be paid off with?

    • 7 months ago
  • jubal
  • dinm76
  • beccainseattle
    • +1
      beccainseattle  
    • Image

    • We all know that the Investment Banks are defrauding our country, and indeed, the globe, but the question remains as how best to deal with the situation.

      Recently, I learned that the derivatives market represents $600T worth of capital, that is now clearly worthless in light of these exposed moves to insure these bets, but the entire global economy is only worth $200T. These Banks are literally Too Big To Bail Out.

      Not if, but WHEN these Banks begin to crash, the American Dollar will go down a well, and with it the rest of the globe tied into this plutocratic clusterf#ck.

      So what do we do?

    • 7 months ago
  • jim_b
  • Dusty_King
    • +1
      Dusty_King  

    • It's time to occupy the Bank Buildings. It's time to go in and secure all of their shady, illegal actives, since Eric Holder is way in over his head and is incapable of following the law.

    • 7 months ago
  • JohnA
  • Dagum
    • +2
      Dagum  
    • JohnA:

      BOA is not getting a traditional 'Congressional" bailout when BOA goes down. They are automatically getting one from the FDIC which insures the deposits. But the FDIC fund is only a few billion and then they tap directly into the credit line with the U.S. treasury.

    • 7 months ago
  • beccainseattle
  • Fishinflick
    • +2
      Fishinflick  

    • The Banking Cartel enjoys a socialization of losses that ensures compensation - including bonuses - through tax revenue and austerity measures imposed upon society. This form of wealth transfer or extraction to the top is unprecedented; it is neither capitalism or socialism - it resembles a form of criminal feudalism. This system that allows the Banking Cartel unlimited access to extract wealth from society will ensure world-wide unrest leading to revolution if it is not stopped dead in it's tracks. It worked out so well here in 2008 that today's announcement comes as no surprise.

      The Banking Cartel hides risk, there is no accountability to the society that's supplying their financial backing. Reported bank earnings are bogus numbers based on speculation that no one can ever have an accurate accounting of. The Banking Cartel exists to generate compensation, the numbers of which - including bonuses - comprise the only visible accounting.
      The Banking Cartel does not generate money, it is a global hedge fund with no down side unlike a true hedge fund that has to report losses to it's bottom line. Society allows the Banking Cartel steady compensation for wins, losses and utter collapse. No member of society regardless of political leanings anywhere in the world should support or condone this type of government sanctioned feudalism imposed upon it's people.

      The Banking Cartel, as long as it is dependent on society to keep solvent must be treated like a public owned utility. It must operate with a zero profit margin - every cent earned returned to society with interest; salaries and compensation commiserate with similar service industry utilities; and under no circumstances will bonuses be paid until the industry repays all debts, stands on it's own and reports and takes on it's own losses with absolutely no future funding from society. Better yet ban all future bail-outs, starting with this one. That this should be thrown out there in the face of a worldwide OWS movement should be fuel to the fire.

      Here's great video I originally saw posted on AmpedStatus that is kind of funny in that the pro-WS Bloomberg host Schatzker gets quite a different outcome from his interview with Taleb about the OWS movement, he gets an indictment of the Banking Cartel - it's brilliant!

      http://www.youtube.com/watch?v=fDMCXMrLAdM

    • 7 months ago
  • nardo1224
    • +3
      nardo1224  

    • I cannot wait until Americans realize how screwed we are by the people who we trusted to look out for our best interest and begin holding hanging parties for government officials.

    • 7 months ago
  • alexandrek
  • kvb1
    • +1
      kvb1  
    • alexandrek:

      If nothing is done to reverse this, it is too late. Europe is about to implode, with Greece being the fuse. It will be closely followed by Spain, Portugal, Iceland, and Ireland. As they fall Germany, France and the UK will collapse. All paper "assets" will be just that paper. We will not be talking about Trillions in value wiped out, but Quadrillions, a number most American never heard of and can not comprehend.

    • 7 months ago
  • David_H
  • kvb1
    • +1
      kvb1  
    • David_H:

      I have found this attributed to several sources including The Bankers Manifesto of 1892 "Congressman Charles A. Lindbergh, Sr. revealed the Bankers Manifesto of 1892 to the U.S. Congress somewhere between 1907 and 1917." Trying to source this is like running down the rabbit whole.
      It may be just conspiracy theory, however, it does seem like that is what the plan is.

    • 7 months ago
  • David_H
  • kvb1
  • mybologna
    • +1
      mybologna  

    • I say it is all planned. B of A collapses, US taxpayers bail it out through the FDIC, The bill will be so large that our deficit will rise. Everyone will lose faith in US bonds, The US will be threatening to default. The republicans and democrats will dismantle the social safety net and sell off US assets(national parks, postal service, Smithsonian, ect.). States will also sell assets to make up for federal shortfall. All education, fire fighting, and medical services become privatized and corporate run. Only the Army and police will be part of government and they will be in charge of filling the corporate owned and run jails and detention centers. It would be the republican/libertarian wet dream. I hope I'm wrong but if we don't do something and fight back I see tyranny in our future.
      PS- The Greek parliament approved the austerity package imposed to them by the bankers in the midst of a general strike and widespread discontent. That's how bankers killed democracy in its birthplace.

    • 7 months ago
  • kvb1
  • MauriceLacunza
  • Incredulous
  • beccainseattle
    • +4
      beccainseattle  

    • Let 'em fail! Or at least threaten that you will let them fail unless they agree to take bailout money with REAL regulatory strings attached. But since that will never happen in this political climate... LET EM FAIL!!!

    • 7 months ago
  • rossmick
  • nikonwilly
    • +3
      nikonwilly  

    • They are desperate and will now try anything....Be prepared for red flag operations around the globe. I think they still believe they can make this go away with some type of "devastation" ....You have to believe that if anything happens in the next month or so...it will be part of their agenda. They will try and use, OWS as a stepping stone for advancing the NWO ! We need to tread slowly and understand they have been planning their moves for a long,long time. I fear, " Blood in the streets , it's up to my ankles , blood in the streets it's up to my knees!

    • 7 months ago
  • dinm76
  • NiceN
  • Vic_Romano
  • remanns
    • +4
      remanns  
    • Vic_Romano:

      No kidding. Best to make light, while there is still light to be had.

      p.s. really,......not kidding,......we have watched a short fuse being rolled out in plain light of day in front of our faces - - -

      ( if the elites loose "the system",.... they perceive themselves as having "lost it all" anyway,...................they will gamble with the rest of us all without blinking an eye or pausing to yawn.)

    • 7 months ago
  • Vic_Romano
  • remanns
  • queenofit
    • +9
      queenofit  

    • http://dailybail.com/home/william-black-on-democracy-now-fire-geithner-holder-be...

      "Broadcasting on the road from Kansas City, Missouri, we’re joined by William Black, a white-collar criminologist, former financial regulator, and author of "The Best Way to Rob a Bank is to Own One." Black teaches economics and law at the University of Missouri-Kansas City and recently took part in Occupy Kansas City."

      Here he speak of many things wrong with the banking industry, he also talks about "Bank of America, because it just broke yesterday that affiliates of Bank of America—this is Merrill Lynch—with really bad derivatives, has been allowed by the Federal Reserve to transfer perhaps many billions, or perhaps even trillions—we don’t know—of these derivatives to Bank of America, which is where we come in as a federal guarantee, and it puts us on the hook as the government. This is obscene public policy ......"

    • 7 months ago
  • GavinTheMother
  • nikonwilly
  • gypsysailor
  • bailey78
  • artemis6
  • Dagum
  • coolplanet
  • ClassicalGas
  • JanforGore
  • Dagum
  • remanns
  • WakeUpPeople
  • WakeUpPeople
    • +5
      WakeUpPeople  

    • As long as this continues, we are slaves. I hope that whatever may come from OWS includes fundamental reform (if not abolishment) of the Fed.

    • 7 months ago
  • cmc101
    • +6
      cmc101  

    • Maybe we should put troops in Bank of America and treat the bosses as pirates and charge then with stealing public property.,
      Let the teabaggers complain on network news
      " Let them die , burn them at the stake, use napalm and flame throwers "
      live entertainment on your Ipad

    • 7 months ago
  • JustZ
  • remanns
    • +2
      remanns  
    • cmc101:

      How about if we have the American Executive Branch simply empower small local American saving and loans with "letters of marque" to simply attack and seize on the seas of finance any and all euro-trash-banks they can waylay ?

      Helps our economy,......and they get what they deserve.

      Any financial institution that serves more than 100,000 need not apply.

      ( SURELY Obama can slam a martini, grab his scrotum with one hand and sign with the other,....but he will have to protect his nuts because OUR scurvy knave banks are SURE to come after them. )

    • 7 months ago
  • remanns
    • +6
      remanns  
    • cmc101:

      p.s. It Would be fun to see American mercs invading the financial offices of foreign firms !

      Hell, we could let them borrow some marines,....just pull em' from Afghanistan !

    • 7 months ago
  • remanns
  • kgMA
  • artemis6
    • +6
      artemis6  

    • They are just setting US up to be the fall guy of the world . Anyone Else want to try and work within the system to change it ? They have not been playing by the rules for a while now . If we do we will continue to be at a disadvantage . This is not in anyone's best interest . United we cannot fail . They know this and are desperately trying to prevent this . They will stop at NOTHING . We must stand together . They are not playing responsibly with their toys , so we must take them away .

    • 7 months ago
  • squarethecircle
    • +3
      squarethecircle  
    • artemis6:

      they are continuing to move all the eggs in one basket...closer to their lack of a heart. Watch, next the super congress will abolish the FED, take back control of the dollar and have one bank that clearly is building us a brand new future for all of our protection that already controls 150Trillion dollars, that we know, worth of Europe's monetary value. It's all their money anyway....they are just grouping it all together so it's a bigger pile to roll in.

    • 7 months ago
  • JanforGore
  • artemis6
  • nikonwilly
  • squarethecircle
    • +7
      squarethecircle  

    • between these two companies they are transferring enough for $21,430 for every individual on the planet and it is theirs to use in any fashion that suits them...not okay as they've shown what they will do with it...now it is our turn....Occupy

    • 7 months ago
  • artemis6
  • Dagum
  • chew_chew
    • +5
      chew_chew  

    • Lemme see... this is what they are able to do with "all the regulation" they are "burdened" with. Imagine how bad it would already be if there were no regulation at all.

      Although, for all practical purposes, there really is no *enforceable* regulation on them now.

      It appears to be a race: BIG money and the end of freedom worldwide VS Occupy.

      I'm pulling, and participating as I am able, for Occupy.

    • 7 months ago
  • bailey78
  • squarethecircle
  • Mark701
  • bailey78
  • bailey78
  • artemis6
  • Dagum
    • +7
      Dagum  

    • .. I was beginning to get upset that the U.S. taxpayer was only on the hook for gambling debts of U.S. banks.

      It's great to know that we will be on the hook for the imminent collapse of the European banks as well.

    • 7 months ago
  • percipi224
    • +7
      percipi224  

    • the actual money put in to the ponzi scheme may have only been 55, bill. but the 75trill may be the entier ponzi schemes debt. world wide. That is the nature of a ponzi am I wrong? Not knowing how these things actually work except to rob people and run with the money

    • 7 months ago
  • JustZ
    • +8
      JustZ  

    • Is it any wonder why you need an advanced degree in economics as well as Case Law to even begin to understand what these crooks are getting away with? The very language they use is designed to keep all of us in the dark while they embezzle billions from the 99%... those of us who actually pay taxes!

    • 7 months ago
  • Mark701
    • +11
      Mark701  

    • What this would do is bankrupt America. All the tangible assets on planet Earth aren't worth 75 TRILLION dollars. Jesus Christ! WTF is going on here?! Has Benanke finally lost his marbles or is he secretly working for the Chinese. Thanks very much for posting. Voted up.

    • 7 months ago
  • Dagum
    • +11
      Dagum  
    • Mark701:

      "has Benanke finally lost his marbles"

      What they are doing is obviously insane unless you know the reason why. They want the global financial system to collapse on purpose. They want to bring down every nation.

      Then they can introduce their one world currency that is controlled by one transnational bank as a "solution" to the problems they deliberately created. This will cement the power of an elite group of Hedge fund managers and international bankers: forever.

    • 7 months ago
  • squarethecircle
  • Mark701
    • +8
      Mark701  
    • Dagum:

      If they bring down the world economy that I'm going to assume hedge fund managers will be shot, hung, garroted and otherwise hunted down like dogs. In a case like this there is no such thing as a managed collapse. There are too many variables and too much uncertainty. Additionally, as the Europeans are finding out if one country has a problem, they all do. Trying to establish a world currency would be insane. Then again insanity has never stopped them before....

    • 7 months ago
  • bailey78
  • nikonwilly
LOrion
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