By Pam Martens and Russ Martens: April 1, 2020 ~
Wall Street Had Cut 68,000 Jobs and Received Trillions in Emergency Loans Prior to COVID-19 Anywhere in the World
Goldman Sachs Bank USA is the poster child for the insanity inherent in the U.S. banking system (with JPMorgan Chase and Citigroup’s Citibank not far behind). It has $228.8 billion in assets, $34.5 billion in risk-based capital, and $42.2 trillion in notional derivatives (face amount). Federal regulators are relying on Goldman Sachs Bank USA to have hedged $42.2 trillion in derivatives so that its netted out total credit exposure from all of its derivative contracts is just $118.4 billion rather than $42.2 trillion — which is still 344 percent of its risk-based capital.
That’s a big leap of faith given that JPMorgan Chase in 2012 had no idea its derivative traders in London were hiding massive losses on their derivative trades until a media leak brought on an investigation. JPMorgan CEO Jamie Dimon told the media at the time that it was all just “a tempest in a teapot.” But once the Senate’s Permanent Subcommittee on Investigations looked into the matter, it turned out to be a $6.2 billion loss on derivatives. The London traders had used the insured deposits of the bank as if they were chips in a gambling casino.
Even a calamity like that, which launched an FBI probe, did not move the Federal Reserve to tame these banking behemoths on Wall Street.