The Meltdown

Are the Banks Safe?

Is the toxicity of toxic assets rising? According to McClatchy, the five biggest banks reported that their current net loss risk from derivatives has surged 49 percent in 90 days to total $587 billion. J.P. Morgan, which has so far weathered the financial storm well, faces the largest exposure, with $241 billion in derivative investments; Citibank is next with $140 billion. According to McClatchy, “Federal regulators portray the potential loss figures as worst-case. However, the risks of these off-balance sheet investments, once thought minimal, have risen sharply as the U.S. has fallen into the steepest economic downturn since World War II, and the big banks' share prices have plummeted to unimaginable lows.”