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No fix for the derivatives monster

It’s still not clear if the Obama administration has a plan for dealing with the derivatives monster, which is one of the biggest problems regulators must confront in dealing with the potential collpase of a “too big to fail” financial institution.

The administration’s financial regulatory reform package would give the FDIC, and in some cases the SEC, broad authority to transfer a firm’s derivatives book to a “bridge instititution” to avoid “termination of the contracts by the firm’s counterparties.” But that may be easier said then done.

In fact, the FDIC currently has the power to transfer derivatives contracts for banks it oversees–but it must do that in one day before it takes over a bank. But still no one has ever said how such a tranfer would take place with a bank the size of Citigroup, which has a derivatives book with a notional value of $32 trillion.

Would Citi’s derivatives book be transferred to JPMorgan Chase, which already has the largest derivatives portfolio, with a notional value of $87 trillion? Could JPMorgan, even temporarily, possibly manage all of those derivatives contracts?

Kanas is the main man

It was never a secret that former North Fork CEO John Kanas was the prime mover behind a group of private equity firms that recently acquired the assets and banking operations of Florida-based BankUnited, a failed lender that the regulators had to takeover. But bid documents submitted by the investor group reveal just how central Kanas was to putting the team of private equity buyers together.

The formal bid for BankUnited came from a company called JAK Holdings, LLC, an entity that listed Kanas as its sole member, according to bid documents submitted to the Federal Deposit Insurance Corp. It appears JAK Holdings is the entity through which private equity firms such as, WL Ross, Carlyle Group, Blackstone and other invested. Technically, JAK Holdings submitted its bid on behalf of the new BankUnited. 

FDIC saves the media

This is a tough time to be in the news business. It’s certainly a lot tougher running a newspaper than a bank–at least the federal government is bailing out some of the really big ones.

But the Federal Deposit Insurance Corp., which has had its hands full taking over failing regional banks, is also doing its small part to help out the news media. Over the course of the past year, the FDIC has shelled-out some $7.6 million in media buys and public relations activities as part of its 75th anniversary celebration.

Failing upwards at BofA


goldsteinThe ouster of Bank of America’s chief risk officer, Amy Woods Brinkley, should not cause anyone to shed any tears.

Even though Brinkley was one of the few top female executives working on Wall Street, her departure is well deserved and has nothing to with gender inequality in the world of finance as some might suggest.