HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trade

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades

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.

Read more at:

dailybail.com...



Yes, you heard that right - 75 trillion dollars.....the big 5 American banks have trillions in derivatives...more money then there is in the world. (like JP Morgan 79 trillion.) The banks want the taxpayer to be held accountable.

To me this is huge, why would they move these to a depository arm - they are going to have to show transparency in reporting and accounting. It is my opinion these banks have been insolvent for years, but they have been cooking the books to hide the fact. I guess this might be why they are coming down hard on people trying to close their accounts - they need all the liquidity they can get their hands on.

and personally, I have seen a lot of errors lately with banking ATMS - something is coming I believe (so make sure to have some extra funds on hand if a bank holiday is coming in the near future)

the derivative implosion is going on in Europe as well, just google Dexia (kind of like Europe Bear Stearns)

sgtreport.com...

The more I read stories like this one the more feel like destroying these big banks. Lucky for them I don't live anywhere near their major branches...

Their day will come one day, the people around the world will be sick of their # and destroy them.

Delete this post pls. I think I hit 'submit' twice by accident.

They're gambling that the Federal government will deem them too big to fail, and to save the investments made by the bank that undercut much our economy including the productive parts, that they'll get a way to write off this derivative mess.

I've been saying this for a while, but if you do nothing else here, learn what derivatives and credit default swaps are, because they are driving inflation, insane profits, and the eventual collapse of global and national banking systems. The banks are trying to play the house on what is inherently not a fifty/fifty or even favorable proposition, and they will get caught out with us having to pay for it.

reply to post by ArrowsNV


dont get the trenchcoat out just yet lol.

Let me get my money first

The problem is when this blows up, there is no way anyone can save them, or us.

There is more fake money tied up in derivatives then the total GDP of the entire globe.

I have never seen a real dinosaur yet i believe they are real, i have never seen a platypus yet i believe they are real i have never seen that many zeros attached to a monetary denomination and i DON'T believe its real how on gods green earth can a company spend more money than even exist on the planet? who let this happen? to big to fail no kidding i hate that saying but lets be real here the FDIC cant just pull that much out of its hind quarter WTF is wrong with the world where someone can spend more money than even exist awesome job fellas how about we all just push the big red button now and get it over with

and last i knew the FDIC only insured 250k of an acct after that it was your loss so how many accts would that much money be to be all protected? i bet thats a creative accounting trick to split that up like that!

I think trying to make a bail-out fly in the midst of the OWS movement and with the general sentiment in the country so anti-bank is going to be like launching a lead derigible. I don't think it can happen. If it did there would be a very serious possibility of riots. My gut tells me that BoA knows the jig's up. This could be their death-throws.

What they're doing is or should be highly illegal.

Derivatives are what big banks use to hedge risk and invest multi-millions but somehow they can use it as a depository to loan money from?

No wonder we're going down, this is ludicrous.

Maybe I'm not understanding this, but isn't this the beginning of the rapid demise of all banking systems? No one can backstop 75 trillion, let alone the Fed. The FDIC is in the hole already and can't even back up the 7 trillion of monies in the U.S. banking system. The elusive game is finally going to expose itself...the whole world can't backstop the 600 trillion in derivatives debt...can it??

Starting in 2005 Banks started giving mortgages to illegal immigrants.

Around 2008 HUD released a report saying 5 million illegals walked away from their mortgages.

The true number now is around 24 million illegals have walked away from their mortgages. They bought and sold homes between themselves and fled America with mega-Trillions.

Average mortgage $350,000....times 24 million illegals....you do the math.

There's a reason South of the Border is booming and America's going down the hole. We been robbed.

Banks are still giving mortgages to illegal immigrants. Since none of those people had SS numbers or ID's...the Banks can't track the people to get their money back.

75 x 10^12 dollar...

$75000000000000

just to put that into perspective. theres nothing I actually can say other than that is insane and a joke. *waves magik wand and make symboly paper* >_>

seriously, the word unhitched doesn't even cut it. even the term bat ** crazy doesn't cut it. anyone?

ed: I think its just another distraction. oo big numbers, be worried. no, no thanks. bored.

Originally posted by conspiracytheoristIAM
Maybe I'm not understanding this, but isn't this the beginning of the rapid demise of all banking systems? No one can backstop 75 trillion, let alone the Fed. The FDIC is in the hole already and can't even back up the 7 trillion of monies in the U.S. banking system. The elusive game is finally going to expose itself...the whole world can't backstop the 600 trillion in derivatives debt...can it??

A Derivative is not debt. Derivatives are merely a futures contract where in most cases these corporations make less than 1% profit from a future deal.

reply to post by MidnightTide


Thats not possible. Theres no gold left in ft. knoxx, Its all just a put up job, Selling derivities isn't real paper, its the idea of real paper. So in effect the fed is having a sale on smoke and mirrors...

What gets me is folks will buy the smoke and mirrors, and think theyve made a profit.
How do you have a sale on something when your already 15+ trillion in the red?
In effect the feds BROKE, and there selling pipe dreams.
its all just numbers on a spread sheet, but it isn't real, its a big lie.

The elite are running scared, nothings working.

For those who think that things will be peachy eventually.

Invest in Lead, Brass and Tin(s of food).

This can't last, eventually people are going to get very, very angry and act upon it. OWS won't even be a pimple on the peoples anger if this comes crashing down.

I really hope this is a hoax and that the people in charge really don't think this will work.

But didn't Buffett just give a big helping hand to BoA?

Well....

here's something to add to your mourning corn flakes (lol, no misprint):

Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure

that is utterly insane... you can't keep inventing money without consequences. This is nothing more that governmentally approved counterfeiting!

 

- ATS member flice

While we're at it, does the U.S. government have any exclusive logging contracts with Canada to secure timber? We're gonna need the paper!

They won't backstop the entire $75 trillion... (well I sure as hell hope not) They are just doing this for ``confidence`` from derivatives traders.

What they gonna do IMO worst case... is take the $1 trillion in deposits to pay the derivatives... and the FDIC will pay back the $1 trillion in deposits.

So at most, IMO, they will ``only`` be able to steal a trillion.

Just to mention that the FDIC has nowhere near that money.

Oh look,
The Legatus 2011 Annual Pilgrimage
Rome Segment: October 16-23, 2011

I wonder if that crazy Reinhardt is right, and everything is going to fall apart on the 23th.

Weeeeee, doom

As far as I understand, if one of those top 4 banks go belly up, it will make Lehman Brothers seem like a daycare center. In order for the Fed, Obama, and Geithner to escape a certain lynching, they are basically forced to stand under the crumbling foundation and hold it up. With a $600 Trillion Derivatives/CDS bubble looming there is a good deal of panic since the much needed money is tied up in hedges loaned to other countries (who cannot pay it back).

The world's gross domestic product (GDP) is only about $65 trillion, or roughly 10.83% of the worldwide value of the global derivatives market, according to The Economist. So there is literally not enough money on the planet to backstop the banks trading these things if they run into trouble.

They borrowed from Peter to pay Paul, now Peter wants his loan with interest, but Paul lent it to Mary, who borrowed it to pay Peter the other loan. But now Paul wants his money with interest from Mary, who still owes Peter. And since nobody has the money to pay each other, they all agree to create IOUs to pass to each other, but the money never gets paid, yet the interest piles up. Then they start writing post-dated checks to cover the IOUs while still not getting back to the actual cash transactions.That's pretty much what the trash bond peddlers are doing........