Article Image
News Link • Obama Administration

Geithner, Summers, Bair on Wall Street

• Fox
 

The US government, however, owns stakes in about 600 banks, two car companies, has effectively nationalized an  insurance conglomerate, AIG, and has nationalized housing finance giants Fannie Mae and Freddie Mac, both of which have combined balance sheets veering toward half the GDP of the US, once off balance sheet items are included.

At the same time, the Federal Reserve is propping up the mortgage and consumer borrowing markets in an effort to keep rates low with massive purchases of debt securities. Estimates show that the Fed is on track to own 17% of the $10.4 tn market for mortgage debt securities, Treasury debt, and debt issued by Fannie and Freddie.
 
Geithner and his executive team fear a collapse of a sizable, intrinsically significant bank or company could trigger a meltdown due to unstable derivatives, now amounting to about 13 times the GDP of the US. Top commercial banks own derivatives that amount to more than $200 tn in notional value, according to the Office of the Comptroller of the Currency. JPMorgan Chase tops the list with about $70 tn in notional derivatives, with Goldman Sachs exposed to $31 tn. Executives say this is a gross figure, and that via successful hedging, the amounts are actually smaller.
 
 
 

Join us on our Social Networks:

 

Share this page with your friends on your favorite social network:

Purse.IO Save on All Amazon Purchases