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The bigger concern is a contagion effect; because banks trade with each other and if one major bank gets taken out, this can create a nasty cascade effect across markets as other banks get pinched by counterparty risk.
To provide more clarity, the Depository Trust & Clearing Corporation, which runs the central registry for swaps, has just begun publishing weekly data on the largest (but not broken down by counterparty).A streamlining of back offices, which were swamped as trading surged, is also necessary.
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At the end of July, the Federal Deposit Insurance Corporation proposed a new rule that would require troubled banks under its regulatory wing to produce, on the agency's demand, detailed records of swaps and other financial contracts, their current market values, collateral posted by counterparties, the identities of those parties and copies of the agreements.
All told, by escaping such contracts, Williamson has freed up $600 million in credit held by counterparties as collateral.
U.S. dollar swap spreads the difference between the yield received by counterparties in a fixed-for-floating swap agreement and Treasurys are off the charts.
"We expect this pullback by counterparties will hurt the earnings of the firm's fixed income, equities and commodity derivative franchises," Hintz said in a research note last week.
Kahn further stressed that "privacy in payments is desired not just for illegal transactions, but also for protection from malfeasance or negligence by counterparties or by the payments system provider itself".
Individual traders' winning positions can grow without bound, matched by losing positions held by counterparties.
Both were runs (one by depositors, the other by counterparties and lenders) that forced the hands of policymakers to engage in a bailout.
WhaTheo you total the U.sumecofomy woulargeok like at the end of the decade with or without such a private sector energized reinvestment in Main Street?
There was a time in the financial markets when this executive and his associates would have been quietly cut off by counterparties.
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