Skip to main content

View Diary: Swiss Bank Folds After US Criminal Conviction (43 comments)

Comment Preferences

  •  Wegelin is NOT a TBTF bank (4+ / 0-)

    The banks that are primarily vampire squids and zombies (they would be dead like Wegelin if they weren't so big and "systemically important") are the large money center banks, which pretty much means the list of the Federal Reserve's primary dealers (the banks the New York Fed uses to buy and sell into the financial markets):

    Bank of Nova Scotia, New York Agency
    BMO Capital Markets Corp.
    BNP Paribas Securities Corp.
    Barclays Capital Inc.
    Cantor Fitzgerald & Co.
    Citigroup Global Markets Inc.
    Credit Suisse Securities (USA) LLC
    Daiwa Capital Markets America Inc.
    Deutsche Bank Securities Inc.
    Goldman, Sachs & Co.
    HSBC Securities (USA) Inc.
    Jefferies & Company, Inc.
    J.P. Morgan Securities LLC
    Merrill Lynch, Pierce, Fenner & Smith Incorporated
    Mizuho Securities USA Inc.
    Morgan Stanley & Co. LLC
    Nomura Securities International, Inc.
    RBC Capital Markets, LLC
    RBS Securities Inc.
    SG Americas Securities, LLC
    UBS Securities LLC.
    There are also a few large banks, such as Wells Fargo, that are not Fed Primary Dealers, but which hold massive amount of derivatives. The Atlantic Monthly has an excellent article up about this particular issue: What’s Inside America’s Banks? which notes that over 90% of derivatives are held by only six TBTF banks. The Comptroller of the Currency issues a Quarterly Report on Bank Trading and Derivatives Activities that has that information.

    But go read the Atlantic Monthly article to understand that small players like Wegelin are not the problem.

    A chief executive of one of the nation’s largest financial institutions told us that he regularly hears from investors that the banks are “uninvestable,” a Wall Street neologism for “untouchable.”

    That’s an increasingly widespread view among the most sophisticated leaders in investing circles. Paul Singer, who runs the influential investment fund Elliott Associates, wrote to his partners this summer, “There is no major financial institution today whose financial statements provide a meaningful clue” about its risks. Arthur Levitt, the former chairman of the SEC, lamented to us in November that none of the post-2008 remedies has “significantly diminished the likelihood of financial crises.” In a recent conversation, a prominent former regulator expressed concerns about the hidden risks that banks might still be carrying, comparing the big banks to Enron....

    A crisis of trust among investors is insidious. It is far less obvious than a sudden panic, but over time, its damage compounds. It is not a tsunami; it is dry rot. It creeps in, noticed occasionally and then forgotten. Soon it is a daily fact of life. Even as the economy begins to come back, the trust crisis saps the recovery’s strength. Banks can’t attract capital. They lose customers, who fear being tricked and cheated. Their executives are, by turns, traumatized and enervated. Lacking confidence in themselves as they grapple with the toxic legacies of their previous excesses and mistakes, they don’t lend as much as they should. Without trust in banks, the economy wheezes and stutters.

    A conservative is a scab for the oligarchy.

    by NBBooks on Thu Jan 03, 2013 at 10:04:27 PM PST

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site