These Charts Suggest the Whole Wall Street Casino Has Become Taxpayer-Backstopped

Six mega-banks that are too big to fail and are highly interconnected continue to take massive positions in opaque derivatives.

By Pam Martens and Russ Martens of Wall Street on Parade

Stock Trading Pattern of Citigroup, Prudential Financial, Bank of America, Goldman Sachs and Morgan Stanley, December 1, 2018 through December 31, 2018
Stock Trading Pattern of Citigroup, Prudential Financial, Bank of America, Goldman Sachs and Morgan Stanley, December 1, 2018 through December 31, 2018
Stock Trading Pattern of Citigroup, Prudential Financial, Bank of America, Goldman Sachs and Morgan Stanley, July 1, 2015 through January 20, 2016
Stock Trading Pattern of Citigroup, Prudential Financial, Bank of America, Goldman Sachs and Morgan Stanley, July 1, 2015 through January 20, 2016

According to the Federal Deposit Insurance Corporation (FDIC), as of September 30, 2018 there was a total of $13.6 trillion in deposits at all 5,397 Federally insured banking and savings institutions in the U.S. but just nine mega banks represented 40 percent of all domestic deposits. Those nine are the insured banking units of the holding company for JPMorgan Chase with $1.3 trillion in domestic deposits; Bank of America at $1.36 trillion; Wells Fargo with $1.27 trillion; Citigroup at $504 billion; U.S. Bancorp $314 billion; Morgan Stanley $181 billion; BB&T $161 billion; Goldman Sachs $130 billion; and State Street $108 billion.

Unfortunately, the FDIC’s Deposit Insurance Fund had only $100.2 billion as of September 30, 2018 to cover losses should any of those trillion-dollar-banks fail – which means they can’t fail and have thus become known as too-big-to-fail, even as they continue to take massive positions in opaque derivatives.

Even more unfortunate for the American people and the U.S. financial system, six of those mega banks are highly interconnected: JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley. We know how interconnected these banks are as a result of studies issued by the Office of Financial Research (OFR), a Federal agency created under the Dodd-Frank financial reform legislation of 2010 to prevent a replay of a handful of Wall Street banks taking down the U.S. financial system again as they did in 2008. We also know just how interconnected these banks are because of how their stocks all trade as a herd when there is fear in the stock market. (See charts above.)

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