Earlier Too-Big-To-Fail Posts
TBTF Banks: Those at the Top Are Still the Ones Doing the Derivatives Trading
For those who have seen this table in earlier posts, here’s the update. The issue is what constitutes a systemic bank. Dodd-Frank says $50 billion and above in balance sheet assets. This table shows the assets of U.S.-headquartered banks as ranked by assets by the Federal Reserve. It also shows their derivatives portfolios and their…
Read MoreDerivatives and Too-Big-To-Fail Banks: Creating Systemic Risk
This speech was delivered to the New York Society of Security Analysts on December 3, 2104, as part of a conference on systemic risk. I’ve tried to insert the slides with the reader in mind. I was at the time chair of NYSSA’s Market Integrity Committee’s subcommittee on systemic risk, an extremely awkward role. 70%…
Read MoreDerivatives and Systemic Risk: It’s Also About Jobs
[This research was posted to the New York Society of Security Analysts’ Finance Professionals’ Post on August 24th, 2014.] Derivatives are the least understood component of systemic risk. Derivatives pose issues of size, measurement and behavior unlike loans. They string the biggest banks together in ways unseen three decades ago and even undermine job creation.…
Read MoreLarry Summers, President Obama and the Fed Chairmanship
President Obama will make one of the most important decisions of his second administration when he nominates the next Fed Chairman. Election politics are the norm, but does the fate of the nation recede into the background as Larry Summers’ star rises? Is President Obama more comfortable with Treasury officials who helped build the financial…
Read MoreIs the Fed Playing Favorites with Too Big To Fail Banks?
“Don’t fight the Fed!” That’s the second-best known maxim in financial markets after “buy low, sell high.” But if market participants “don’t fight the Fed,” Federal Reserve actions that differentiate between Too Big To Fail banks may add to systemic risk. What makes these huge banks systemic is their interconnectedness, particularly through derivatives. Weakness in one can be transmitted…
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