A Government Study Shows that Wall Street Megabanks Have Dramatically Shifted their Derivative Exposure to Corporations — Pam and Russ Martens

The last thing a volatile stock market needs right now is more surprises from the dark corners of Wall Street. Unfortunately, we can guarantee you that more surprises are coming in the way of uncleared derivatives blowing up on the balance sheets of publicly-traded corporations.

How do we know this? The information in the chart above comes from a study quietly released last July by the Office of Financial Research (OFR). That’s the federal agency that provides research to bank regulators to prevent systemic financial contagion from taking down the Wall Street megabanks and the U.S. economy in another replay of 2008.

What the study actually shows, however, is that neither Congress nor bank regulators have done anything meaningful to prevent derivatives from once again blowing up the world’s largest economy. Instead, the watchdogs have simply allowed a rearrangement of the deck shares on the Titanic. While Wall Street megabanks previously concentrated their counterparty risk with each other and foreign global banks, necessitating that the Fed had to bail out dodgy banks on foreign shores, they’ve now shifted their counterparty risk to corporations....

Another game of musical chairs?

Wall Street On Parade
A Government Study Shows that Wall Street Megabanks Have Dramatically Shifted their Derivative Exposure to Corporations
Pam Martens and Russ Martens

https://wallstreetonparade.com/2022/01/a-government-study-shows-that-wall-street-megabanks-have-dramatically-shifted-their-derivative-exposure-to-corporations/