US banks with biggest derivatives exposure

CNBC:

The Appleseed Fund this month added five large banks to the list of stocks that it screens out under its socially responsible investing criteria. Appleseed is the first mutual fund to explicitly exclude stocks of big banks under such criteria, which more traditionally target "sin" stocks tied to alcohol, gambling, pornography, tobacco and weapons.

Appleseed selected the five banks based on their exposure to derivatives, private bets on how the value of assets like crops or measures like interest rates will change in the future. While companies often use the securities to hedge against risk, speculative derivatives trading has been blamed as a key trigger of the financial crisis.

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Below are the five bank stocks that Appleseed refuses to buy, and those banks' total holdings in derivatives. The totals, as of March 31, are from bank holding companies' first-quarter filings, as compiled by the U.S. Office of the Comptroller of the Currency.

1. JPMorgan Chase & Co. $76.9 trillion
2. Bank of America Corp. $71.2 trillion
3. Goldman Sachs Group Inc. $49.1 trillion
4. Citigroup Inc. $42.3 trillion
5. Morgan Stanley $40.7 trillion

And what is a derivative:  A financial contract with a value linked to the expected future price movements of the asset i.e. share or a currency. Wikipedia explains it simply:

The following example helps to clarify: a person goes to the grocery store, exchanges a currency (money) for a commodity (say, an apple). The exchange is complete, both parties have something tangible. If the purchaser had called the store and asked for the apple to be held for one hour while the purchaser drives to the store, and the seller agrees, then a derivative has been created. The agreement (derivative) is derived from a proposed exchange (trade money for apple in one hour, not now).