Bank of America Dumps Trillions of Dollars of Risk onto Taxpayers

Tuesday, October 25, 2011
Brian Moynihan, CEO of Bank of America
In an ominous sign for the economy, Bank of America, in an attempt to protect itself from its toxic assets, recently moved $75 trillion (with a “t”) in derivatives from its non-federally-protected Merrill Lynch securities unit to a subsidiary insured by the Federal Deposit Insurance Corp (FDIC).
By doing so, BofA has positioned the FDIC to be the fall guy if the derivatives shift causes the subsidiary to fail, which would then require the federal agency to step in and save the day. The situation is disturbingly similar to that the one that led to the financial crisis just three years ago.
The move was demanded by counterparties, evidently in this case the high-finance equivalent of insurance companies, after Moody’s downgraded BofA’s credit rating a month ago.
FDIC officials reportedly argued with the Board of Governors of the Federal Reserve, which sanctioned the move by BofA. The FDIC disapproved because it may not be able to handle a rescue of this size—in which case the federal government would have to engage in yet another costly bailout of the nation’s second largest bank and leave taxpayers footing the cost.
Three years ago, BofA received $45 billion from the Department of the Treasury to keep it from crashing during the financial crisis.
-Noel Brinkerhoff
Is Bank of America Headed for the Glue Factory? (by Mike Whitney, CounterPunch)
BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit (by Bob Ivry, Hugh Son and Christine Harper, Bloomberg)

GAO Report Highlights Federal Reserve Conflicts of Interest (by David Wallechinsky and Noel Brinkerhoff, AllGov) 


Mickey Carroll 11 years ago
i write songs about prevalent issues in the world and produce concerts that give back to world community . you got to give back - producer howard albert audio vision studios miami this is a press release that went out to the internet world . entitled you got to give back a song i composed dedicated it to corporate america . the economy song - top video list orange tv orlando onward mickey
Jim Nagell 11 years ago
the current government through the "stimulus program" has taxed me, my children, grand children into tax poverty for decages. if the bofa fails there just isn't any tax payers or tangible money "to foot the bill."
Ormond Otvos 11 years ago
clearly an illegal transfer, although sophisticated financial analysts realize that it isn't anywhere near trillions, but merely small billions.
Glen 11 years ago
in charlotte, they are known as the bank of india because they are pioneers in outsourcing job. so the ppl they lay off still have to pay taxes to cover this. wow, talk about sticking it in and breaking it off.
Scott Yahtzee 11 years ago
i've been debating whether or not to close my boa account due to some of their practices, well the debate is over.

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