Remember those nuclear time bombs called derivatives, structured finance vehicles we've been writing about for months?
A new Fitch Agency report, 'Derivatives: A Closer Look at What New Disclosures in the U.S. Reveal (you must login, very obnoxious website!) show:
80% of the derivative assets and liabilities carried on the balance sheets of 100 companies reviewed by Fitch were held by five banks: JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley. Those five banks also account for more than 96% of the companies' exposure to credit derivatives.
Look at these non-financial companies, one which slash and burns it's workforce, IBM and another which just went through bankruptcy.
The Fitch analysts also found that just 22 companies disclosed the use of equity derivatives. Just six nonfinancial firms — IBM, General Motors, Verizon, Comcast, Textron, and PG&E — reported exposure to share-based derivatives
Fitch reviewed 1Q'09 filings of 100 companies from a range of industries representing nearly US$6.4 trillion in aggregate outstanding debt and a total notional amount of derivative positions in excess of $296 trillion.
Ok, am I reading this correctly to state that $236.8 trillion dollars of derivatives are in the hands of just 5 companies?
Sounds about right
Last time I checked in January, JPMorgan stood at $80 trillion, Citi and BofA at roughly $40 trillion apiece, and Goldman Sachs at $30 trillion, so $190 trillion total, plus Morgan Stanley (whatever they are at, it can't be good) and any growth - since nothing has been really put in place to stop this securitization/derivatives scam.
Note that in Michael Lewis' article in this month's Vanity Fair on A.I.G., he states that A.I.G. still has $450 billion of credit default swaps on the corporate side (meaning, I guess, corporate receivables, CLOs, CFOs, and any other myriad of derivatives categories).
Say, which party was it that won that last presidential election?