Bank stock safety and derivatives It appears from the OCC that 96% of the total derivatives in US banks are held by five US banks. The derivatives apparently are not classified as to the whether they are collateralized or not, nor as to risk assessment. I was planning on purchasing some BAC stock for a long term hold, but am concerned about the credit risk impact of these derivatives on the security of the BAC stock. For example, BAC total assets are $1 trillion with total derivatives of $18 trillion. http://www.occ.treas.gov/toolkit/newsrelease.aspx?Doc=MC44FU0H.xml http://www.occ.treas.gov/ftp/deriv/dq205.pdf Is there anyone who can shed some insight on the downside of these derivatives and what events would make the risk higher? In otherwords, how do you assess the safety of bank stocks that have large derivative profolios?