Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives

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B of A is in a world of shit me thinks...

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades


UPDATE - Chcek out regulator William Black's blistering reaction to this story HERE.

This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.

This means that the investment bank's European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.

What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.

This is a recipe for Armageddon. Bernanke is absolutely insane. No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks. His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began.

Bloomberg
Excerpt:
Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.

“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”
MOODY’S DOWNGRADE

The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter.

Keeping such deals separate from FDIC-insured savings has been a cornerstone of U.S. regulation for decades, including last year’s Dodd-Frank overhaul of Wall Street regulation.

U.S. Bailouts

Bank of America benefited from two injections of U.S. bailout funds during the financial crisis. The first, in 2008, included $15 billion for the bank and $10 billion for Merrill, which the bank had agreed to buy. The second round of $20 billion came in January 2009 after Merrill’s losses in its final quarter as an independent firm surpassed $15 billion, raising doubts about the bank’s stability if the takeover proceeded. The U.S. also offered to guarantee $118 billion of assets held by the combined company, mostly at Merrill.

Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.

Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law.

“Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said. The discount window has been open to banks as the lender of last resort since 1914.

Continue reading at Bloomberg...

http://dailybail.com/home/holy-bailout-federal-reserve-now-backstopping-75-trillion-of.html
 

Josh_R

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Jan 29, 2005
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Awesome! Thank you Congress. Is there even $75 trillion in wealth in the entire fucking world?
 

Party Rooster

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Awesome! Thank you Congress. Is there even $75 trillion in wealth in the entire fucking world?
It's really not Congress (right now). It's the Fed. But the FDIC is against it. I really don't know a lot about a lot of it, but I've been hearing rumblings for months that B of A has been on the verge of going belly-up for months now. And then they got downgraded by Moody's. They've been fudging their financial statements to make them look a lot better than they are. A lot of economists are predicting this to be really bad for them, but we'll see. This is a great read:

William Black: Not With A Bang, But A Whimper: Bank Of America’s Derivatives Death Rattle

BAC continues to deteriorate and the credit rating agencies have been downgrading it because of its bad assets, particularly its derivatives. BAC’s answer is to “transfer” the bad derivatives to the insured bank – transforming (ala Ireland) a private debt into a public debt. (Photo - Bank of America San Francisco Headquarters)

Background coverage of this story can be found here:

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades

Guest post by William K. Black

Bob Ivry, Hugh Son and Christine Harper have written an article that needs to be read by everyone interested in the financial crisis. The article (available here) is entitled: BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit. The thrust of their story is that Bank of America’s holding company, BAC, has directed the transfer of a large number of troubled financial derivatives from its Merrill Lynch subsidiary to the federally insured bank Bank of America (BofA). The story reports that the Federal Reserve supported the transfer and the Federal Deposit Insurance Corporation (FDIC) opposed it. Yves Smith of Naked Capitalism has written an appropriately blistering attack on this outrageous action, which puts the public at substantially increased risk of loss.

I write to add some context, point out additional areas of inappropriate actions, and add a regulatory perspective gained from dealing with analogous efforts by holding companies to foist dangerous affiliate transactions on insured depositories. I’ll begin by adding some historical context to explain how B of A got into this maze of affiliate conflicts.

Ken Lewis’ “Scorched Earth” Campaign against B of A’s Shareholders

Acquiring Countrywide: the High Cost of CEO Adolescence

During this crisis, Ken Lewis went on a buying spree designed to allow him to brag that his was not simply bigger, but the biggest. Bank of America’s holding company – BAC – became the acquirer of last resort. Lewis began his war on BAC’s shareholders by ordering an artillery salvo on BAC’s own position. What better way was there to destroy shareholder value than purchasing the most notorious lender in the world – Countrywide. Countrywide was in the midst of a death spiral. The FDIC would soon have been forced to pay an acquirer tens of billions of dollars to induce it to take on Countrywide’s nearly limitless contingent liabilities and toxic assets. Even an FDIC-assisted acquisition would have been a grave mistake. Acquiring thousands of Countrywide employees whose primary mission was to make fraudulent and toxic loans was an inelegant form of financial suicide. It also revealed the negligible value Lewis placed on ethics and reputation.

But Lewis did not wait to acquire Countrywide with FDIC assistance. He feared that a rival would acquire it first and win the CEO bragging contest about who had the biggest, baddest bank. His acquisition of Countrywide destroyed hundreds of billions of dollars of shareholder value and led to massive foreclosure fraud by what were now B of A employees.

But there are two truly scary parts of the story of B of A’s acquisition of Countrywide that have received far too little attention. B of A claims that it conducted extensive due diligence before acquiring Countrywide and discovered only minor problems. If that claim is true, then B of A has been doomed for years regardless of whether it acquired Countrywide. The proposed acquisition of Countrywide was huge and exceptionally controversial even within B of A. Countrywide was notorious for its fraudulent loans. There were numerous lawsuits and former employees explaining how these frauds worked.

B of A is really “Nations Bank” (formerly named NCNB). When Nations Bank acquired B of A (the San Francisco based bank), the North Carolina management took complete control. The North Carolina management decided that “Bank of America” was the better brand name, so it adopted that name. The key point to understand is that Nations/NCNB was created through a large series of aggressive mergers, so the bank had exceptional experience in conducting due diligence of targets for acquisition and it would have sent its top team to investigate Countrywide given its size and notoriety. The acquisition of Countrywide did not have to be consummated exceptionally quickly. Indeed, the deal had an “out” that allowed B of A to back out of the deal if conditions changed in an adverse manner (which they obviously did). If B of A employees conducted extensive due diligence of Countrywide and could not discover its obvious, endemic frauds, abuses, and subverted systems then they are incompetent. Indeed, that word is too bloodless a term to describe how worthless the due diligence team would have had to have been. Given the many acquisitions the due diligence team vetted, B of A would have been doomed because it would have routinely been taken to the cleaners in those earlier deals.

That scenario, the one B of A presents, is not credible. It is far more likely that B of A’s senior management made it clear to the head of the due diligence review that the deal was going to be done and that his or her report should support that conclusion. This alternative explanation fits well with B of A’s actual decision-making. Countrywide’s (and B of A’s)reported financial condition fell sharply after the deal was signed. Lewis certainly knew that B of A’s actual financial condition was much worse than its reported financial condition and had every reason to believe that this difference would be even worse at Countrywide given its reputation for making fraudulent loans. B of A could have exercised its option to withdraw from the deal and saved vast amounts of money. Lewis, however, refused to do so. CEOs do not care only about money. Ego is a powerful driver of conduct, and CEOs can be obsessed with status, hierarchy, and power. Of course, Lewis knew he could walk away wealthy after becoming a engine of mass destruction of B of A shareholder value, so he could indulge his ego in a manner common to adolescent males.

Acquiring Merrill Lynch: the Lure of Liar’s Loans

Merrill Lynch is the quintessential example of why it was common for the investment banks to hold in portfolio large amounts of collateralized debt obligations (CDOs). Some observers have jumped to the naïve assumption that this indicates that the senior managers thought the CDOs were safe investments. The “recipe” for an investor maximizing reported income differs only slightly from the recipe for lenders.

Grow rapidly by
Holding poor quality assets that provide a premium nominal yield while
Employing extreme leverage, and
Providing only grossly inadequate allowances for future losses on the poor quality assets
Investment banks that followed this recipe (and most large U.S. investment banks did), were guaranteed to report record (albeit fictional) short-term income. That income was certain to produce extreme compensation for the controlling officers. The strategy was also certain to produce extensive losses in the longer term – unless the investment bank could sell its losing position to another entity that would then bear the loss.

The optimal means of committing this form of accounting control fraud was with the AAA-rated top tranche of CDOs. Investment banks frequently purport to base compensation on risk-adjusted return. If they really did so investment bankers would receive far less compensation. The art, of course, is to vastly understate the risk one is taking and attribute short-term reported gains to the officer’s brilliance in achieving supra-normal returns that are not attributable to increased risk (“alpha”). Some of the authors of Guaranteed to Fail call this process manufacturing “fake alpha.”

The authors are largely correct about “fake alpha.” The phrase and phenomenon are correct, but the mechanism they hypothesize for manufacturing fake alpha has no basis in reality. They posit honest gambles on “extreme tail” events likely to occur only in rare circumstances. They provide no real world examples. If risk that the top tranche of a CDO would suffer a material loss of market values was, in reality, extremely rare then it would be impossible to achieve a substantial premium yield. The strategy would diminish alpha rather than maximizing false alpha. The risk that the top tranche of a CDO would suffer a material loss in market value was highly probable. It was not a tail event, much less an “extreme tail” event. CDOs were commonly backed by liar’s loans and the incidence of fraud in liar’s loans was in the 90% range. The top tranches of CDOs were virtually certain to suffer severe losses as soon as the bubble stalled and refinancing was no longer readily available to delay the wave of defaults. Because liar’s loans were primarily made to borrowers who were not creditworthy and financially unsophisticated, the lenders had the negotiating leverage to charge premium yields. The officers controlling the rating agencies and the investment banks were complicit in creating a corrupt system for rating CDOs that maximized their financial interests by routinely providing AAA ratings to the top tranche of CDOs “backed” largely by fraudulent loans. The combination of the fake AAA rating and premium yield on the top tranche of fraudulently constructed (and sold) CDOs maximized “fake alpha” and made it the “sure thing” that is one of the characteristics of accounting control fraud (see Akerlof & Romer 1993; Black 2005). This is why many of the investment banks (and, eventually, Fannie and Freddie) held substantial amounts of the top tranches of CDOs. (A similar dynamic existed for lower tranches, but investment banks also found it much more difficult to sell the lowest tranches.)

Merrill Lynch was known for the particularly large CDO positions it retained in portfolio. These CDO positions doomed Merrill Lynch. B of A knew that Merrill Lynch had tremendous losses in its derivatives positions when it chose to acquire Merrill Lynch.

Given this context, only the Fed, and BAC, could favor the derivatives deal

Lewis and his successor, Brian Moynihan, have destroyed nearly one-half trillion dollars in BAC shareholder value. (See my prior post on the “Divine Right of Bank Profits…”) BAC continues to deteriorate and the credit rating agencies have been downgrading it because of its bad assets, particularly its derivatives. BAC’s answer is to “transfer” the bad derivatives to the insured bank – transforming (ala Ireland) a private debt into a public debt.

Banking regulators have known for well over a century about the acute dangers of conflicts of interest. Two related conflicts have generated special rules designed to protect the bank and the insurance fund. One restricts transactions with senior insiders and the other restricts transactions with affiliates. The scam is always the same when it comes to abusive deals with affiliates – they transfer bad (or overpriced) assets or liabilities to the insured institution. As S&L regulators, we recurrently faced this problem. For example, Ford Motor Company attempted to structure an affiliate transaction that was harmful to the insured S&L (First Nationwide). The bank, because of federal deposit insurance, typically has a higher credit rating than its affiliate corporations.

BAC’s request to transfer the problem derivatives to B of A was a no brainer – unfortunately, it was apparently addressed to officials at the Fed who meet that description. Any competent regulator would have said: “No, Hell NO!” Indeed, any competent regulator would have developed two related, acute concerns immediately upon receiving the request. First, the holding company’s controlling managers are a severe problem because they are seeking to exploit the insured institution. Second, the senior managers of B of A acceded to the transfer, apparently without protest, even though the transfer poses a severe threat to B of A’s survival. Their failure to act to prevent the transfer contravenes both their fiduciary duties of loyalty and care and should lead to their resignations.

Now here’s the really bad news. First, this transfer is a superb “natural experiment” that tests one of the most important questions central to the health of our financial system. Does the Fed represent and vigorously protect the interests of the people or the systemically dangerous institutions (SDIs) – the largest 20 banks? We have run a real world test. The sad fact is that very few Americans will be surprised that the Fed represented the interests of the SDIs even though they were directly contrary to the interests of the nation. The Fed’s constant demands for (and celebration of) “independence” from democratic government, combined with slavish dependence on and service to the CEOs of the SDIs has gone beyond scandal to the point of farce. I suggest organized “laugh ins” whenever Fed spokespersons prate about their “independence.”

Second, I would bet large amounts of money that I do not have that neither B of A’s CEO nor the Fed even thought about whether the transfer was consistent with the CEO’s fiduciary duties to B of A (v. BAC). We took depositions during the S&L debacle in which senior officials of Lincoln Savings and its affiliates were shocked when we asked “whose interests were you representing – the S&L or the affiliate?” They had obviously never even considered their fiduciary duties or identified their actual client. We blocked a transaction that would have caused grave injury to the insured S&L by taking the holding company (Pinnnacle West) off the hook for its obligations to the S&L. That transaction would have passed routinely, but we flew to the board of directors meeting of the S&L and reminded them that their fiduciary duty was to the S&L, that the transaction was clearly detrimental to the S&L and to the benefit of the holding company, and that we would sue them and take the most vigorous possible enforcement actions against them personally if they violated their fiduciary duties. That caused them to refuse to approve the transaction – which resulted in a $450 million payment from the holding company to the S&L. (I know, $450 million sounds quaint now in light of the scale of the ongoing crisis, but back then it paid for our salaries in perpetuity.)

Third, reread the Bloomberg column and wrap your mind around the size of Merrill Lynch’s derivatives positions. Next, consider that Merrill is only one, shrinking player in derivatives. Finally, reread Yves’ column in Naked Capitalism where she explains (correctly) that many derivatives cannot be used safely. Add to that my point about how they can be used to create a “sure thing” of record fictional profits, record compensation, and catastrophic losses. This is particularly true about credit default swaps (CDS) because of the grotesque accounting treatment that typically involves no allowances for future losses. (FASB: you must fix this urgently or you will allow a “perfect crime.”). It is insane that we did not pass a one sentence law repealing the Commodities Futures Modernization Act of 2000. Between the SDIs, the massive, sometimes inherently unsafe and largely opaque financial derivatives, the appointment, retention, and promotion of failed anti-regulators, and the continuing ability of elite control frauds to loot with impunity we are inviting recurrent, intensifying crises.

I’ll close with a suggestion and request to reporters. Please find out who within the Fed approved this deal and the exact composition of the assets and liabilities that were transferred.

http://dailybail.com/home/william-black-not-with-a-bang-but-a-whimper-bank-of-americas.html
 

d0uche_n0zzle

**Negative_Creep**
Sep 15, 2004
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#4
Considering there are about 600 trillion dollars in derivatives in the world (world economy is about 65 trillion) 95% of which are held by US banks.

We is FUCKED.
 

BloodyDiaper

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Oct 7, 2005
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I couldn't wait to get home from work and post the Bill Black piece but I see OAPC saved me the trouble. The Occupy movement would be very smart to pay attention to his work and get him to represent them in the media, too bad they are against that kind of thing.

Amazing interview:

[YT]zq-sO_uNaFw[/YT]
 

Motor Head

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#9
You boys all stocked up on shotgun shells and canned food? There is a shit storm coming, make sure you have an umbrella.
 
May 24, 2004
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#10
I had trouble believing those Zero Hedge articles saying BofA was on the verge of collapse. Now I sorta believe it.
 

MayrMeninoCrash

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#12
I've heard BOA is teetering on the brink for a few months now myself. Hopefully someone has the balls to stand up this time and not let the American taxpayer take it in the shorts.
 

phillyfranko

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#13
I've heard BOA is teetering on the brink for a few months now myself. Hopefully someone has the balls to stand up this time and not let the American taxpayer take it in the shorts.
BOA just posted a 2+ Billion profit for 3rd Qtr today...
and they have over 1.2 Trillion in deposits...fell to #2 in USA...
 

CousinDave

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#14
I've heard BOA is teetering on the brink for a few months now myself. Hopefully someone has the balls to stand up this time and not let the American taxpayer take it in the shorts.

Not after Little Barry's bag man put 5 billion in BOA
 

Don the Radio Guy

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I couldn't wait to get home from work and post the Bill Black piece but I see OAPC saved me the trouble. The Occupy movement would be very smart to pay attention to his work and get him to represent them in the media, too bad they are against that kind of thing.

Amazing interview:

[YT]zq-sO_uNaFw[/YT]
Democracy Now watermark at 00:01. Thank you for saving my time in not watching 18:03 of epic fail.
 

Party Rooster

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#18
BOA just posted a 2+ Billion profit for 3rd Qtr today...
and they have over 1.2 Trillion in deposits...fell to #2 in USA...
About that...

Bank of America's earnings aren't real

There's too much uncertainty and fuzzy math in these profits.
By InvestorPlace on Tue, Oct 18, 2011 7:52 AM
By Jeff Reeves, InvestorPlace.com

This morning we saw a seemingly impressive earnings report from Bank of America (BAC). Revenue was up. Profits beat expectations. Good news, right?

Not so much. A closer look at the numbers shows some fuzzy math that only a contortionist could feel comfortable with. The real bottom line is that Bank of America earnings are still ugly and that the entire financial sector remains a very risky bet.

Here are the headline numbers: Bank of America earnings rose by $6.2 billion, or 56 cents per share. Revenue was up 6% at $28.8 billion. Wall Street was expecting EPS of 20 cents on revenue of $25.95 billion, so it all looks pretty good on paper.

But the latest quarter's earnings figure included $4.5 billion in "fair value adjustments." In short, this means a bank can decide how much its assets and liabilities are worth on its own. For instance, a few days earlier, both JPMorgan (JPM) and Citigroup (C) said the spread between their debt and U.S. Treasurys led to "profits."

No business actually transpired -- other than a different number being used to calculate the Excel spreadsheet in accounting. Theoretically, as their debt "loses value," it is cheaper for banks to pay it off, resulting in a paper gain.
Related: 5 reasons everyone hates Bank of America
Confused? You should be, because an accounting move that conjures billions out of thin air seems fishy to many investors. Interested parties can read an excellent, detailed report on the accounting practices from Reuters here. Unfortunately, we have other fuzzy math to discuss in regards to B of A and have to keep moving.

Next up is is the pretax gain of $3.6 billion from Bank of America's sale of shares in China Construction Bank. Obviously a huge one-time gain like this cannot be re-created. And as I wrote when the deal went down, the sale damages the future of BAC lending in China, a crucial emerging market, considering how poor the credit market is in the U.S. and Europe right now.

Then there's the loss of $2.2 billion related to private equity and strategic investments. Investors had a rough third quarter, too, but $2.2 billion seems a bit ugly for a supposed Wall Street icon.

To top it off, all this comes after a Monday report from BofA's credit card division that indicated an increase in late customer payments for September, the first such uptick in a year. Additionally, Bank of America still has one of the highest credit card default rates in the industry

The squints on Wall Street can fight over the finer details of this quarter's earnings at B of A. But the bottom line is that nobody knows how bad things really are. One-time charges, goofy "mark to market" tricks juicing numbers -- these are simply not playing fair.

Worse, what we do know about lingering problems with consumer lending means an even darker picture for financial stocks.

Consider these other earnings reports:

J.P. Morgan Chase (JPM) saw third-quarter earnings slip 3.5%, thanks to higher expenses. On the revenue front, things are going nowhere fast -- 2009 and 2010 full-year revenue totals were almost identical. As for 2011, JPM is looking at a slight decline in revenue.

Wells Fargo's (WFC) third-quarter earnings missed expectations as the financial stock's loan business didn't grow fast enough. The revenue trend for WFC is also ugly, with six straight quarterly reports that show year-over-year declines. Not inspiring.
Related: Derivatives – a $600 trillion time bomb
‎A massive one-time accounting gain allowed Citigroup (C) to eke out its seventh consecutive quarterly profit. But subtract a paper gain of $1.9 billion related to the risk of its debt and "mark-to-market" accounting shenanigans, and the $2.2 billion in profits shrinks to a very unimpressive level. Revenue is all over the place, ranging from a low of $8 billion a quarter to a high of $74 billion a quarter in the last six earnings reports. The company just can't seem to get ahead.

As you can see, Bank of America earnings are just part of a troubling industrywide trend.

True, financial stocks have a tough row to hoe right now. Persistent troubles with bad mortgages and bad debt are eating away the bottom line. Fewer qualified borrowers are out there because of the tough job market and black marks on credit reports due to other economic hardships Americans have had to endure.

But that's all academic. Aside from the fact that financial stocks willfully created the subprime-mortgage bubble, Wall Street isn't much interested in excuses. Investors want to identify profits and risks – nothing more.

Right now there are way too many risks. And worse, it's impossible to truly identify the profits and risks when banks can create billions of dollars out of thin air.

http://money.msn.com/top-stocks/post.aspx?post=1dd2e490-c887-4ffa-ad3e-8de480a14d1d&vv=1100
 
Jun 30, 2005
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#19
Speaking of America taking it in the shorts....

Why doesn't the Fed just short BofA stock...that way when it fails they are covered :)
 

Motor Head

HIGHWAY TRASH REMOVAL
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#20
Leave B of A alone! You all know that privatizing profits and socializing losses is the new American way of doing business.
 

Norm Stansfield

私は亀が好きだ。
Mar 17, 2009
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#21
It's really not Congress (right now). It's the Fed. But the FDIC is against it.
Yeah. The FDIC was set up so that taxpayers would be forced to bail out the popular market participants. Not the unpopular ones.

That's the problem, the fact that the Fed is ignoring political sentiment and using the FDIC in a way that's gonna generate negative headlines. Not that the FDIC is by definition relying forced taxation to mitigate risks for privileged participants.
 

Norm Stansfield

私は亀が好きだ。
Mar 17, 2009
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#22
Leave B of A alone! You all know that privatizing profits and socializing losses is the new American way of doing business.
The FDIC was set up in 1933, and it's been used pretty much the same way the whole time. As long as it exists, financial institutions will continue to use it to pass off risks onto taxpayers.

If you want that to end, vote for a libertarian. But then you'll have to also deal with your own bank deposits being at risk. And you'll probably have to become self-reliant in other areas as well.
 

Mikefrombx

Registered User
Jan 13, 2011
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#24
Bank of America at this point should be looked obtoband charged with some criminal acts. This is complete bullshit and the fucking with the balance sheets is illegal for any business but the banks can do it and expect people to not know or be happy about it

sent from my incredible
 

Motor Head

HIGHWAY TRASH REMOVAL
Jan 23, 2006
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#25
Can one of you economic professors, or at least one of you economics majors please explain what exactly will happen if Bank of America fails. What can I expect to happen if the FDIC is held up by these fucking criminals for their losses?

How does this shit even happen? Why aren't these white collar stick up men all sitting in prison?