Bank Of America Dumps $75 Trillion In Derivatives On U.S. Taxpayers With Federal Approval

Avery Goodman

Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.

Derivatives are highly volatile financial instruments that are occasionally used to hedge risk, but mostly used for speculation. They are bets upon the value of stocks, bonds, mortgages, other loans, currencies, commodities, volatility of financial indexes, and even weather changes. Many big banks, including Bank of America, issue derivatives because, if they are not triggered, they are highly profitable to the issuer, and result in big bonus payments to the executives who administer them. If they are triggered, of course, the obligations fall upon the corporate entity, not the executives involved. Ultimately, by allowing existing gambling bets to remain in insured retail banks, and endorsing the shift of additional bets into the insured retail division, the obligation falls upon the U.S. taxpayers and dollar-denominated savers.

Even if we net out the notional value of the derivatives involved, down to the net potential obligation, the amount is so large that the United States could not hope to pay it off without a major dollar devaluation, if a major contingency actually occurred and a large part of the derivatives were triggered. But, if such an event ever occurs, Bank of America's derivatives counter-parties will, as usual, be made whole, while the American people suffer. This all has the blessing of the Federal Reserve, which approved the transfer of derivatives from Merrill Lynch to the insured retail unit of BAC before it was done.

Contrary to popular belief, which blames the global financial crisis on subprime borrowers, it was the derivatives, based upon the likelihood that those borrowers would pay their debts, that were the primary catalyst triggering the global economic crisis of 2008. Back then, the derivative obligations of AIG (AIG) imploded the insurer. Under the pressure of fear-mongering from the Federal Reserve and the financial industry, the U.S. government committed hundreds of billions of dollars to bail out AIG's counter-parties, including the biggest banks of Europe and America. Had the government not stepped in, virtually all the banks on Wall Street would have gone bankrupt. A host of European and Asian banks would have followed.

AIG was not FDIC insured. It could have been allowed to fail, and should have been allowed to fail. All the banks on Wall Street that would have failed should have failed. Their speculator counter-parties should have been bankrupted, and their retail depositors should have been made whole. The retail divisions could have been temporarily nationalized and sold off as soon as possible to more prudent management. Had this occurred, America would have experienced a deep but very temporary economic downturn, and, by now, the downturn would be over. But, with derivatives obligations tied intimately with FDIC insured depositary units, the debt will need to be paid by the government, as a matter of law. We will have no legal choice except to default, or pay them off.

In 2008, politicians in Washington D.C., and Trojan horse operatives within the financial organs of our government, bailed out imprudent managements of big casino-banks. Bank executives not only didn't need to go bankrupt, as they should have, but collected huge bonuses. Later, in response to the abuse, Congress passed the Dodd-Frank legislation and the Volcker rule. These were supposed to insure that such bailouts were not needed in the future. Supposedly, this would prevent further abuse of the American taxpayer.


More here:  http://seekingalpha.com/article/301260-bank-of-america-dumps-75-tri...

Views: 181

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

Comment by rtaylortitle on January 3, 2012 at 7:49am

I'm told that the taxpayers (the ultimate American underwriter of all this crapola) are in debt to the tune of several quadrillion.  Does anyone know the true number?

Comment by apeman2502 on January 2, 2012 at 5:33pm

  I need a new computer. This one is crawling with human cockroaches on the fascist payroll.

Windows 7 backdoor is now a four laned hiway.

  The Bush41 deregulation made this all possible. The country is being looted. Jesus won't save you just like innocent children are being bombed. Like  Jesus said in John 7:7, I don't want to be strung up today. I think Iwill stay out of Judea. It is not my time. Who among us has such a precious hide that we can not risk to preserve our liberties and our Constitution. Me included. Remember, Jehovah's Witnesses. Your church arose with the Federal Reserve system, in 1913. So did the IRS. The British empire will see to it that you slave to support their opulence if you pray to the wrong God. Remember Christ dumped over the tables of the moneylenders. He and the disciples knew when prayer time was over.

Comment by apeman2502 on January 2, 2012 at 5:15pm

  Think of that the next time you dig a ditch for one of these sockcuckers.

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega posted photos
1 hour ago
tjdavis posted a blog post
17 hours ago
Doc Vega commented on Doc Vega's blog post Is this proof that the story about Charlie Kirk's assassination is false?
"Les prone, Thanks Buddy! "
yesterday
Doc Vega posted a blog post
yesterday
tjdavis posted a photo
yesterday
Doc Vega commented on Doc Vega's blog post Is this proof that the story about Charlie Kirk's assassination is false?
"Less Prone as usual the official version of the truth does not match the evidence and is labeled…"
Saturday
Less Prone commented on Doc Vega's blog post This Memorable Anthem Given by Nick Freitas Hit the Nail on the Head Please Listen!
"Charlie Kirk was getting very critical against Israel and had turned down a lucrative deal from the…"
Saturday
Doc Vega's blog post was featured

The Army of Government Launched Psychopaths

They walk among us in most college towns. They seem relatively reasonable until political…See More
Saturday
Less Prone favorited Doc Vega's blog post Is this proof that the story about Charlie Kirk's assassination is false?
Saturday
Less Prone commented on Doc Vega's blog post Is this proof that the story about Charlie Kirk's assassination is false?
"Have to sign in to YT for this. So. What I do is to go to https://ytdown.io/en/ and download…"
Saturday
Doc Vega commented on Doc Vega's blog post Was a Planned Civil War Averted?
"cheeki kea, you are spot on. The old guard is about to collapse! "
Oct 2
Doc Vega commented on Doc Vega's blog post Alligator Creek and a Japanese Massacre
"cheeki kea, the Japanese thought they could expand their empire and exact enough damage on the US…"
Oct 2
Michelle Reichert favorited Burbia's video
Oct 1
cheeki kea posted a video

NEW DOCUMENTARY - Dissent Into Madness

TRANSCRIPT AND SOURCES: https://www.corbettreport.com/dissent-into-madness/What if the delusions of the dissidents are in fact real? What if their paranoid f...
Oct 1
cheeki kea commented on Doc Vega's blog post Alligator Creek and a Japanese Massacre
"Japan served themselves up no favours by inching out into the South Pacific as they soon found out.…"
Oct 1
cheeki kea commented on Doc Vega's blog post Was a Planned Civil War Averted?
"Their plans did not work out because we are the news now, and the old news is the enemy. "
Oct 1
Doc Vega posted a blog post

Alligator Creek and a Japanese Massacre

The year is 1942 just a few months after the Pearl Harbor disaster. Despite losses suffered by the…See More
Sep 30
Doc Vega commented on Burbia's video
Thumbnail

CHARLIE KIRK WAS CNP! JOSH REEVES 9-11-25

"With all due respect this guy comes off as a drunken asshole and he didn't even  know who…"
Sep 29
Doc Vega posted a blog post

Was a Planned Civil War Averted?

We are living in sadly historic times where good and evil are in battle all the time. Not that this…See More
Sep 28
Sandy posted a photo
Sep 28

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted