This has been described as another bailout, and it’s not hard to see why. The derivatives go into the insured institution, protecting the counter-parties, and they would be paid off in the event of a failure. Notice that the counter-parties themselves are managing the process, requesting that their bets get implicit government backing. The notional value on these derivatives trades is $75 trillion, with a T. This includes their European derivatives exposure. And according to Bloomberg, JPMorgan Chase has already done this.

If Joseph Cassano, the head of AIG’s disastrous Financial Products unit, has granted an interview since the insurance giant melted down, I certainly don’t remember it. That’s what makes today’s Financial Crisis Inquiry Commission hearing so interesting. The theme is the derivatives market, and there will be a particular emphasis on AIG and Goldman Sachs, and how their trading played a role in the financial meltdown.