In his 2002 Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) Shareholders Letter, Warren Buffett famously labeled derivatives weapons of financial mass destruction. Six years and one financial crisis later, those weapons are still active, and their stockpiles are more heavily concentrated than before the crisis thanks to the vanishing of Bear Stearns and Lehman Brothers. According to a recent IMF working paper, the five big arsenals are:

Counterparty Liabilities (March 2009)

Year-on-Year Growth

Goldman Sachs (NYSE: GS)

$91 billion

(13%)

JPMorgan (NYSE: JPM)

$86 billion

26%

Bank of America (NYSE: BAC) / Merrill Lynch

$77 billion

(13%)

Morgan Stanley (NYSE: MS)

$54 billion

(22%)

Citigroup Continued...