Stat of the Week: The Big Export (After The Big Short)?

31 Jan

What it's all about on Wall Street once again? (artwork courtesy of Greg Vagen at

Something is rotten in the state of Denmark and in other foreign lands, and I’m not talking about the European debt crisis.

According to a report, more than half of the derivatives-trading business of five monster Wall Street investment banks would fall largely outside the Dodd-Frank Act if they succeed in lobbying regulators to exempt their overseas operations.

Bloomberg analysis of Federal Reserve filings showed that Goldman Sachs had 62 percent of its $134 billion in fair-value derivatives assets and liabilities in non-U.S. branches or subsidiaries for international banking as of Sept. 30, Morgan Stanley had 77 percent of its $101 billion, JPMorgan Chase 59 percent of $188 billion, Citigroup 53 percent of $122 billion and Bank of America had half of $125 billion in non-U.S. operations.

“Not only is that neglectful from a viewpoint of systemic risk as it sits today, but it’s also an incitement to move the risk abroad,” Darrell Duffie, professor at Stanford University’s Graduate School of Business, told Bloomberg.


(While on the theme, I recently read Michael Lewis’ “The Big Short.” Enjoy the following and countless more great insights in his wonderful Wall Street work: “The problem wasn’t that Lehman Brothers had been allowed to fail. The problem was that Lehman Brothers had been allowed to succeed.”)


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