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Actually, the regulator provides netted out data so there's no trillions of exposure. And Dodd-Frank as well as standard FDIC law permits the FDIC to move assets and obligations of the institution to a newly created institution to protect insured assets. In fact, Dodd-Frank has a specific provision to permit a 1 day hold on all collateral seizure so that the regulators can do this more conveniently.  Furthermore, FDIC is required by law and certainly empowered to require more cash to be kept by depository banks to meet possible collateral calls. So transferring derivatives to the depository bank from the holding company may actually cause banks to have to increase their capital holdings.

http://occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq111.pdf

by rootless2 on Sat Dec 10th, 2011 at 07:26:13 PM EST
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