Increased Risks in ‘TBTF’ Investment Banks

by Danielle Park
Juggling Dynamite

Risks in the global financial system are more concentrated today than they were heading into the 2008 financial crisis. The facts are incontrovertible: 97% of all trading assets in the US banking system and 95% of all derivatives are controlled by the largest six US investment banks. The 30 global investment banks that are deemed ‘systemically important’ control 40% of all lending and 52% of all financial assets in the world. Not only that, but in the US the big 6 bank lobby has been able to queer bankruptcy laws to give derivative claimants (them) priority to seize capital ahead of all other creditors (including customer accounts) in an insolvency. (Recall how counter-party JP Morgan was able to step in and seize MF Global’s re-hypothecated customer assets in 2011.)

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