The Underlying Financial Problem
Nov 30, 2009
The problem in the banking industry that few people talk about is that they are way over their heads in derivativess trading.
J.P Morgan Chase leads the way, on the hook for nearly $80 TRILLION worth. (Note that the figures on the chart in the above link are expressed in billions of dollars. So the figure of $79,941,219 is not $79 million but 79 million times a billion, or 79 trillion.
This was made possible in 1999 when the Glass-Steagall Act was repealed, which destroyed the wall between banking and investment banking. Their derivatives contracts were based on the assumption that the economy would continue to grow and that if the bubble ever burst, the government would consider them to be too greedy to fail.
Dr. Stephen Jones