Banks' off-balance-sheet derivatives holdings continue to march upward, a top federal regulator said Friday.
Douglas E. Harris, senior deputy comptroller of the currency, said that at the end of the second quarter, 666 banks held derivatives with a notional amount of $15.3 trillion. At the end of last year, 669 banks held derivatives with a notional amount of $11.9 trillion.
At the end of June, bank holding companies held off-balance sheet derivatives with a replacement cost of $201 billion, up from $149 billion at the end of 1993, he said.
The OCC is not troubled by banks' increasing derivatives holdings. What's more important is whether banks that use derivatives know what they are doing, Mr. Harris said.
"We want banks to appropriately measure, monitor and control their risk," Mr. Harris said.
He spoke to the American Bar Association's Financial Services committee. He was joined by Joe Seidel, the general counsel for the minority side of the House Banking Committee.
Mr. Seidel predicted that the Congressional dram beat for legislation on derivatives would grow louder early next year, as the House Banking Committee holds more "victims' hearings" on derivatives losses.
