A new way for banks to screw the 99%ers. . .and get a bail out!

[Openmind]

Bank of America is transferring toxic derivatives held by a majority of 1%ers to "FDIC insured accounts" mostly held by the 99%ers. . .because then, whether we like it or not, FDIC will have to cover the losses!

Is this legal?

Is this ethical?

Is this why the GOP respects the banks so much. . .because they can screw all of us, AND blame the Obama administration in the process?

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit
Bob Ivry, Hugh Son and Christine Harper - Oct 18, 2011 1:56 PM ET .
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Regulators Split Over BofA’s Merrill Derivatives Shift Scott Eells/Bloomberg
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.

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. Photographer: Scott Eells/Bloomberg
.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.

 

[dogtowner]

Its certainly creative.

But, as noted, FDIC is only on the hook if BofA goes into failure. They may be in difficult times but failure is unlikely.

This highlights the folly of failing to use Toxic Asset Relief Program (TARP) to relieve the toxic assets. They're as toxic as ever.

I am curious to see how this FED v FDIC battle plays out. If it stands, expect to see more of the same.

 

[pocketfullofshells]

when I think of Bank of America, I think about end of fight club..and smile a bit...

 

[Frolicking Dinosaurs]

Sounds like the bank is getting concerned enough about failure to get creative in protecting the 1%'s asset. Is it legal? Probably given how many politicians the banks own. It it ethical. No.

 

[dogtowner]

Sounds like the bank is getting concerned enough about failure to get creative in protecting the 1%'s asset. Is it legal? Probably given how many politicians the banks own. It it ethical. No.

Maybe so but its all moot as they are too big to fail and will get bailed out no matter what. Meanwhile all the rest of us pay the price for Dodd-Frank.

 

[Frolicking Dinosaurs]

If a lot of money gets moved to credit unions then they will no longer be too big to fail.

My collective family has moved millions out of banks to credit unions in the past month. It wasn't because of the 99%/OWS movement. It was because the banks started tacking on fees to transactions regardless of balance. The elderly members of the family noticed and wanted to move from the banks (something AARP is now pushing and probably why they went to credit unions). The younger members (who have to take care of business for the parents mostly) moved as well for the convenience of being able to bank where the parents' accounts are.

I don't believe my family is all that different from other families. If this is a trend, it would explain the banks sudden move to protect its 1% customers from loss if the trend turns into a tidal wave.

 

[dogtowner]

If a lot of money gets moved to credit unions then they will no longer be too big to fail.

My collective family has moved millions out of banks to credit unions in the past month. It wasn't because of the 99%/OWS movement. It was because the banks started tacking on fees to transactions regardless of balance. The elderly members of the family noticed and wanted to move from the banks (something AARP is now pushing and probably why they went to credit unions). The younger members (who have to take care of business for the parents mostly) moved as well for the convenience of being able to bank where the parents' accounts are.

I don't believe my family is all that different from other families. If this is a trend, it would explain the banks sudden move to protect its 1% customers from loss if the trend turns into a tidal wave.

One has always been able to enjoy a better retail customer experience at small banks or credit unions. Please tell me your family does not have that much money deposited in ANY sort of bank. Not a good idea to keep so much cash in fluid status.

 

[Frolicking Dinosaurs]

There are several trust accounts involved and the majority of the funds moved were in CDs at the banks. Some will not be removed until they mature. Others had no penalty for early withdrawal and have been moved.

 

[dogtowner]

There are several trust accounts involved and the majority of the funds moved were in CDs at the banks. Some will not be removed until they mature. Others had no penalty for early withdrawal and have been moved.

A little better.

 

[Openmind]

Maybe so but its all moot as they are too big to fail and will get bailed out no matter what. Meanwhile all the rest of us pay the price for Dodd-Frank.

What price for Dodd-Frank?

The fact that there is now SOME (not enough, but some) regulation to keep banks from doing SOME unethical, dangerous transactions that lead to bail outs?

 

[dogtowner]

What price for Dodd-Frank?

The fact that there is now SOME (not enough, but some) regulation to keep banks from doing SOME unethical, dangerous transactions that lead to bail outs?

$5 a month for one and a raft of new fee rules you'll be hearing about if you have not already. You realize F&F accounted for 71.% of the subprime time bombs don't you ?

Yup

 

[Openmind]

$5 a month for one and a raft of new fee rules you'll be hearing about if you have not already. You realize F&F accounted for 71.% of the subprime time bombs don't you ?

Yup

What does that have to do with Dodd-Frank?

And, those "subprime time bombs" were not sold by the government, but packaged by and sold by Wall Street!

 

[BigRob]

What does that have to do with Dodd-Frank?

And, those "subprime time bombs" were not sold by the government, but packaged by and sold by Wall Street!

True it was not the government that actually sold those "time bombs", however when you tell a bank that they can take whatever risks they want, and sell off those risks to the government, why wouldn't they do it? And lets not pretend the government was not pushing demand for these as well.

 

[Openmind]

True it was not the government that actually sold those "time bombs", however when you tell a bank that they can take whatever risks they want, and sell off those risks to the government, why wouldn't they do it? And lets not pretend the government was not pushing demand for these as well.

Exactly! Deregulations did the trick!

 

[BigRob]

Exactly! Deregulations did the trick!

If you really want to make that argument, perhaps you ought to look back to when this whole process started...it was not under George Bush.