> How much did the banks succeed in collecting fees while fobbing the risks
> on other investors?
>
Most of the fees the banks took in were related to investment banking, IPO and bond underwriting ($13bln (shared by the top 10 banks) from telecos since 1998, $40bln from other industries). So, they collected their money at the close of each deal before passing the risk off. JPM Chase, though they deny it, tied the loans they provided companies to this hard-fee business, a practice illegal according to anti-trust laws, but widely practiced during the boom.
In the case of Citi, about 70-80%% of their credit risk was passed to investors through a) packaged loan and bond deals, called CDOs (Collateralized Debt Obligations - portfolios of different corporate names) - which were purchased by asset management funds (including for 401ks and retirement funds), pension funds and insurance companies (who used the interest to back things like life insurance) and b) direct selling of specific loan and bond names. JPMChase and Bank of NY sometimes took less direct routes using reinsurance companies as intermediaries who would 'guarantee' the risk of the loans and bonds (skimming off their own fee) and then pass the risk on to end investors. Or sometimes they would use the credit derivatives market to hedge the risk, passing it on to end investors.
The non-performing loans risk these banks still carry, is eating into their revenues and lowering their stock value (meaning more retirement and pension fund erosion). It gets partially paid for by banks lowering the interest they could be paying on consumer accounts (courtesy of Glass-Steagall repeal).
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