Earlier this month, I detailed 25 US commercial banks that had trillions (with a “T”) of dollars’ worth of exposure to derivatives on their balance sheets. At the time, I stated that even if 4% of the notional value of these derivatives was “at risk” and only 10% of that 4% went bad, that you would wipe out the total equity at the five large US banks.
Given how mortgage-backed securities turned out (and those securities were regulated, unlike derivatives), I believe that most, if not all major banks in this country are insolvent or would be recognized as such if you marked the assets on their balance sheets at anything resembling market values.
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