Three Megabanks Had Loans Outstanding of $1.832 Trillion to Giant Hedge Funds.
The Office of Financial Research (OFR), the federal agency created after the 2008 financial collapse on Wall Street to defog the lenses of federal regulators to prevent a replay of that disaster, has posted frightening graphs on its website as part of its “Hedge Fund Monitor.”
Particularly alarming is the overall takeaway that the U.S. megabanks that are receiving federal deposit insurance that is backstopped by hardworking and law-abiding U.S. taxpayers, are using their lending ability to make massive loans to dodgy, giant hedge funds that are regularly found to be on the wrong side of the law and/or engaging in wildly risky behavior. Equally concerning is whether megabank lending to giant hedge funds is sapping their ability to make loans to worthy U.S. businesses that are engaged in the real economy rather than the financial casino economy of hedge funds.
Take the chart below of the page as one example. It shows that just three megabanks provided a combined $1.832 trillion in credit to “Qualifying Hedge Funds” as of March 31, 2024. This represented 79 per cent of all such loans, which had a total value of $2.31 trillion. (See chart at the bottom of the page.) “Qualifying Hedge Fund” is defined as follows:
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