AIG sold protection to banks on pools of risky mortgages and other assets in the $55 trillion credit derivatives market…So, the top six banking institutions that report to the OCC along with AIG [The Magnificent Seven] comprised approximately 18.5 Trillion worth [33.5%] of an industry reported to be 55 trillion in aggregate.
The Federal Reserve’s proxy bank, J.P. Morgan Chase, possessed 8.39 Trillion worth of these derivatives or 15.25% of the global total of outstanding notional.
So folks, what do you suppose the odds are that the Federal Reserve’s proxy bank – J.P. Morgan, the most dominant player in this space - had more than a few trades on its books where AIG was their counterparty?
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