Shortly after Yellen made this statement, the federal regulator of national banks, the Office of the Comptroller of the Currency (OCC), was reporting this:
“A total of 1,364 insured U.S. commercial banks and savings associations reported derivative activities at the end of the fourth quarter of 2017. A small group of large financial institutions continues to dominate derivative activity in the U.S. commercial banking system. During the fourth quarter of 2017, four large commercial banks represented 89.4 percent of the total banking industry notional amounts and 85.9 percent of industry net current credit exposure (NCCE)….”
Those four banks were: JPMorgan Chase with $48.55 trillion in notional (face amount) of derivatives; Citigroup with $48.5 trillion; Goldman Sachs with $41.3 trillion; and Bank of America with $18 trillion.
As of the last quarterly report from the OCC for the quarter ending June 30, 2020, the dystopian bank situation looked like this: JPMorgan Chase had increased its derivatives exposure to $52.6 trillion notional; Goldman Sachs had moved into second place with $43.3 trillion; Citigroup stood at $41.1 trillion; and Bank of America hadn’t budged much at $18.5 trillion.
This massive, concentrated exposure to derivatives at four mega Wall Street banks has been allowed to persist by both Democrat and Republican-led administrations despite the fact that derivatives played a central role in blowing up the U.S. economy in 2008.
Until Congress gets serious about restoring the Glass-Steagall Act, which would separate federally-insured, deposit-taking banks from the trading casinos on Wall Street, the financial system of the United States remains at grave risk, regardless of who sits at the helm of the regulators.