The Coming Financial Meltdown
By Ilan Moscovitz
“Any losses [AIG] may realize … under these derivatives will not be material.”
— AIG, Feb. 12, 2008
We all remember how in late 2008, staggering losses on risky derivatives nearly brought down our entire financial system.
With 43 members of the House and the Senate hammering out a final version of the financial-reform bill, one of the biggest contentions remains what to do about the mind-boggling, vast, and opaque derivatives market owned by the nation’s too-big-to-fail megabanks.
The problem is getting worse. Notional amounts of derivatives held by federally insured banks have risen to more than $200 trillion.