Why do the losses of Jamie Dimon at JPMorgan Chase matter? The Federal Reserve allowed investment banks to convert to bank holding companies, now owning commercial banks, which are FDIC insured.
William Greider writes in the Nation magazine, “JPMorgan Chase parks all of its vast derivatives holdings in its commercial bank subsidiary, which means the taxpayer is on the hook for these losses since commercial banks are FDIC insured.” Greider further states, “In the event of a collapse, the banks can use its deposit base to pay off the derivatives, while leaving the Federal Deposit Insurance Corporation to reimburse depositors if their money runs out. JPMorgan has contracts totaling $72 trillion and 99 percent of them are booked at its FDIC- insured bank.”
Continuing — “We are “insuring” other big boys of banking in the same way. Citigroup has nearly all of its $53 trillion in derivatives in its FDIC-insured bank; Goldman Sachs has $44 trillion parked at and FDIC-backed institution. After Bank of America purchased Merrill Lynch, BoA began transferring the securities firm’s derivatives to the FDIC-insured bank, which now holds $47 trillion in contracts.” And the Ryan Republicans want to invest Social Security with these same bankers?