It's a good thing, as Treasury Secretary Timothy Geithner said in February, that the "U.S. financial system is getting stronger, and is now significantly stronger than it was before the crisis," or else this could be a problem:
Six financial services firms dominate the amount of derivative assets and liabilities carried on the balance sheets of U.S. corporates, according to a Fitch Ratings review of 100 large companies across all major industry groups.
The six firms - JP Morgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc., Citigroup Inc., Morgan Stanley, and Wells Fargo & Co. - hold an excess of 75% of the total derivative assets and liabilities in the sample reviewed by Fitch. The notional amount of all derivatives held by the 100 companies was approximately $300 trillion at year-end 2011. This has remained steady - between $290-$300 trillion - since 2009.
The notional amount of credit derivatives fell to $21.6 trillion at year-end 2011 from $36 trillion in March 2009, a 40% decline.
'Despite a broad decline in the use of credit derivatives post 2008, the concentration in its use continues unabated,' said Olu Sonola, Senior Director, Fitch Ratings. 'Only 16 of the 100 companies reviewed reported exposure to credit derivatives, with six banks accounting for 99.5% of the total exposures.'
Fingers crossed, Mr. Geithner?