Donald Trump Has a Goldman Sachs Problem: Derivatives, by Pam Martens and Russ Martens

Because SLL remembers the last financial crisis, SLL harps on debt and derivatives, which tend to be ignored until they can be no longer. That the world’s toxic combination of debt and derivatives will eventually blow up in a crisis worse than the last crisis is a lead-pipe cinch. From PamMartens and Russ Martens at wallstreetonparade.com:

n the midst of being skewered across media outlets yesterday for his chaotic rollout of an Executive Order that appeared to target Muslims, including those legally living in the U.S. as businessmen, doctors, university faculty and students — who were initially denied reentry after travel abroad — President Donald Trump tried desperately to change the subject. Following a plunge of over 200 points in the Dow Jones Industrial Average yesterday, Trump pivoted to something he thought would please his financial backers on Wall Street. He called the Dodd-Frank financial reform legislation passed in 2010 by the Obama administration a “disaster” and promised to “do a big number” on it soon. The Dow closed down 122 points — now wary of Trump’s fire-ready-aim leadership on complex matters.

The legitimate fear across Wall Street right now is that Trump’s zero-vetting approach to rule-by-Executive-Order could leave Wall Street in the same chaotic state as the airports experienced from his ham-fisted approach to immigration.

But it’s not just Trump that Wall Street needs to fear: it’s Goldman Sachs as well. Trump has stuffed his administration with so many Goldman Sachs progeny that his administration is now regularly referred to as Government Sachs.

Goldman Sachs has a unique vested interest in repealing chunks of Dodd-Frank while making sure that the Glass-Steagall Act is not reinstated. That’s because when it comes to derivatives, Goldman Sachs is keeping a lot of secrets.

The Office of the Comptroller of the Currency (OCC) is the regulator of national banks. Each quarter it publishes a report on the derivative holdings of the biggest Wall Street banks and their holding companies. Its most recent report shows that as of September 30, 2016 Goldman Sachs Bank USA (a taxpayer-backstopped, FDIC insured bank where it holds its derivatives) had “credit exposure to risk-based capital” of 433 percent. That figure was more than double that of JPMorgan Chase (216 percent) and six times that of Bank of America (68 percent).

To continue reading: Donald Trump Has a Goldman Sachs Problem: Derivatives

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