When we don’t learn, we are doomed to keep suffering…the investment banks are still backed by the public purse today and are now bigger and bolder in concentrated risk bets than ever before.
“In the past five years, the firm that took the largest U.S. bank bailout of the financial crisis increased the total amount of derivatives on its books by 69 percent, surpassing most U.S. peers and closing the gap with the market leader, JPMorgan Chase & Co. (JPM) At the end of June, Citigroup had $62 trillion of open contracts, up from $37 trillion in June 2009, company filings show. JPMorgan trimmed its holdings 14 percent to $68 trillion.
Citigroup is expanding as regulators try to rein in instruments that helped fuel the 2008 credit contraction. The third-largest U.S. lender has amassed the largest stockpile of interest-rate swaps, a type of derivative that can swing in value when central banks raise rates. More than 92 percent of the bank’s derivatives don’t trade on exchanges, making it harder for regulators to spot dangers in the market.”