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Reply #66: They're moving some non-proprietary derivatives trading to the retail unit [View All]

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Recursion

(1000+ posts) Send PM | Profile | Ignore

Wed Oct-19-11 08:18 AM
Response to Reply #64

66. They're moving some non-proprietary derivatives trading to the retail unit

This is, incidentally, the first time since the repeal of Glass-Steagall that a bank has actually done this (and they still can't move their proprietary desk to the retail unit). So, as I read it, fair enough, in a repeat of 2008 this does put FDIC on the hook (it's not that the derivatives desk gets FDIC funding, but if it flames out and takes the lest of the retail unit with it, the FDIC will have to cover their retail account losses). The FDIC wouldn't pay back the derivatives account holders, but those accounts do bring additional risk to the ordinary checking account holders.

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