Banks Hoarding Cash To Pay For Derivatives Liabilities

Tomorrow, the auction for Lehman's credit default swaps will be held, and the final result will probably be that that holders of credit default swaps will have to pay around $360 billion dollars That's for Lehman alone. Derivatives exposure due to other failed businesses is even higher.
This is why Wall Street firms and banks have been hoarding cash. As the Financial Times wrote on October 7th:
Banks are hoarding cash in expectation of pay-outs on up to $400bn (£230bn) of defaulted credit derivatives linked to Lehman Brothers and other institutions, according to analysts and -dealers.

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