I take back every bad thing I've said about the CDM and JPM's derivative book. Well the derivatives anyway.Yesterday, Barry Ritholtz at The Big Picture had this post:
Chris Whalen at the Institutional Risk Analyst asks an interesting question: How Much Capital Does a Bank Need?
The short answer: Alot.
The longer answer depends upon the bank's derivative exposure. Chris includes this handy chart to help you figure out just what that cap need might be:
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Economic Capital is as calculated by IRA. All figures in $000 :
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Sources: FDIC/IRA Bank Monitor; Q1 2008 data shown in “bank only” rollup.
WTF? $90 Trillion dollars derivative exposure for JPMorgan ? No wonder the Fed "rescue" of Bear Stearns was via JPM -- it was their own derivative exposure that was at risk.
I thought everyone knew that. Go to TBP for some interesting comments.
