So he basically admitted that JPM was the next domino to fall if Bear had declared bankruptcy. And JPM has, nominally, 24T dollars worth of derivatives at stake, of which Bear was the counterparty.
http://www.gold-eagle.com/editorials_02/chapmand061302.html
This is a story that bears repeating. J. P. Morgan Chase & Co. (JPM-NYSE) is one of the biggest banks in the world with assets of approaching US$ 700 billion, capital of about US$ 41 billion and a market cap of US$ 71 billion. By comparison Canada’s largest bank the Royal Bank of Canada (RY-TSE, NYSE has assets of about US$ 235 billion, equity of about US$ 12 billion and a market cap of about US$ 26 billion. J.P. Morgan Chase is roughly three times the size of Canada’s largest bank.
But there is an area where J.P. Morgan Chase dwarfs the Royal Bank. Indeed J.P. Morgan Chase dwarfs everyone in this business. The business is derivatives. In the USA J. P. Morgan Chase is over 50% of the derivatives market. According to figures from the Office of the Comptroller of the Currency (OCC) as at December 31, 2001 JPM had notional amounts of derivative contracts outstanding of US$ 23,520 billion or US$ 23.5 trillion. That was out of total derivatives of reporting banks of US$ 45.4 trillion. The aforementioned Royal Bank of Canada had at the end of their second quarter a notional amount outstanding of approximately US$ 1.2 trillion.
About half way down your link this interesting paragrapgh states:
One of the more curious exposures is gold derivatives. JPM has been the subject of considerable scrutiny by the Gold Anti-Trust Committee (GATA) as one of the chief culprits behind the alleged gold manipulation. JPM certainly does have large outstandings in gold derivatives. According to figures from OCC JPM had over US$ 41 billion of gold derivatives as at December 31, 2001. This represented almost 65% of all the gold derivatives held by US banks. It also represents the equivalent of 149 million ounces of gold assuming the closing price of gold on December 31, 2001 at US$ 279. Of course what we don’t know is the net exposure position as the figures are only the gross outstandings. And we don’t know whether their position is long or short gold and how it might relate to physical holdings. Still it did represent a drop of US$ 14.8 billion or 26.5% from the outstandings at the end of the second quarter. Quite a drop.
Do you know more about this? This was in 2002!
And if that had happened, the whole system would collapse.
And then? What?
“And JPM has, nominally, 24T dollars worth of derivatives at stake, of which Bear was the counterparty.”
Ehhhhh...you’re off..a bit...say by 2/3...hang on to your shorts...
“At the end of 2007, J.P. Morgan’s exposure totaled $77.2 trillion in notional value, exceeding that of any other commercial bank, while Bear Stearns had $13.4 trillion in notional value.”
http://financialweek.com/apps/pbcs.dll/article?AID=/20080324/REG/110730692/1003/rss02