BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit (MUST READ)

[Roland99]

Source: Bloomberg

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.

...

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.

...

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.

Read more: http://www.bloomberg.com/news/2011-10-18/bofa-said-to-split-regulators-over-moving-merrill-derivatives-to-bank-unit.html

---

The title doesn't do this justice. BoA is looking to hook US taxpayers for $75 *Trillion* in derivatives!!


MORE:

Federal Reserve and Bank of America Initiate a Coup to Dump Billions of Dollars of Losses on the American Taxpayer
http://www.zerohedge.com/contributed/federal-reserve-and-bank-america-initiate-coup-dump-hundreds-billions-dollars-losses-ame

1.The bank holding company (BAC) is moving troubled assets held by an entity not insured by the public (Merrill Lynch) to the Bank of America, which is insured by the public

2. The banking rules are designed to prevent that because they are designed to protect the FDIC insurance fund (which the Treasury guarantees)

3. Any marginally competent regulator would say “No, Hell NO!”

4. The Fed, reportedly, is saying “Sure, no worries” by allowing the sale of an affiliate’s troubled assets to B of A

5. This is a really good “natural experiment” that allows us to test whether the Fed is protects the public or the uninsured and systemically dangerous institutions (the bank holding companies (BHCs))

6. We are all shocked, shocked that Bernanke responded to the experiment by choosing to protect the BHC at the expense of the public.

Three cheers for 1999's Gramm-Leach-Bliley Act which made all this possible!!

:mad:



Time to call Congress critters, Dem and Repub alike, and demand they take action to stop this!

[xchrom]

1. recommend

[DCKit]

2. Dog, I hope this blows up on BoA like crazy.

And it's going to really suck for all of 'em when word gets around to all the OWS sites.

[jwirr]

23. This is something that OWS can demand.

[Devil_Fish]

78. Any one with any accounts at BofA or Chase should move it to a credit union.

The only way to get these derivatives off of the FDIC's back it to remove the deposits that are FDIC insured. This is a good idea for two reasons:

1. If BofA goes belly up, they will pay off the derivatives first, and leave the depositors to be taken care of by the FDIC which legally can take up to 160 days to pay. I don't feel like losing access to my money for 160 days so I'm taking action immediately to move to a credit union.

2. BofA currently holds $1Trillion in deposits. The less deposits they have if and when these derivatives collapse, the less the FDIC will have to pay out. Weather of not you or I have deposits at BofA we tax payers will be on the hook to pay the FDIC Bill.

By closing your BofA (and Chase because they are doing it too)deposit account, you are not only helping your self, but also your fellow Tax Paying Americans.

I can't believe this is legal: http://dailybail.com/home/holy-bailout-federal-reserve-now-backstopping-75-trillion-of.html

D_F

[wordpix]

82. how about BoA subsidiary banks? My bank, "Union Savings" is a BoA subsidiary

but when it swallowed up my local bank, no one said anything about that. It's in the fine print, tho.

[CoffeeCat]

94. If I had friends or family with accounts at BofA...

I would tell them to get the frick out now.

Seriously. I fail to understand how BofA makes it through this.

I skimmed through this article--I hope to read in greater detail later this evening--and I couldn't
believe what I was reading.

Derivatives? Credit-default swaps? Seriously. WTF?

This is 2008 all over again--and we're supposed to PAY for their continued crimes?

I just watched "Too Big To Fail" today on HBO. I think I want to hurl in my mouth.

Please remember--the banks promised when we bailed them out, that NEEDED the funds to unfreeze
the credit markets and to ease inter-bank lending. The promised to use the bailout funds
to unfreeze the credit markets. THEY DID NO SUCH THING.

So, let's get this straight. The banks:

1.)Bribed and corrupted our politicians and perverted our entire democracy by paying off our politician--in order
to purchase deregulation and to relax banking standards.

2.)Dove into this deregulated environment and made a shit ton of money doing risky business that made them
outrageously rich--when they knew it was all a house of cards that would come tumbling down.

3.) Demanded that "We The People" bail them out--from a mess of their own making (that garnered them
trillions in profits) and then they didn't use OUR MONEY as they promised.

4.) Then, the banks proceeded with the same risky/greedy schemes and now it's all going to hell again.

And we're supposed to bail them out again?

We've got Wall Street occupied--during a time of great emotion and uprising--and now the banks are crashing
again due to the same greedy, criminal behavior that caused the 2008 crash?

O........M...........F.......G

[DCKit]

111. You've got the cycle nailed CoffeeCat. Now rinse and repeat.q

But we're not supposed to complain - just keep handing it over.

[sarcasmo]

3. Derivatives should be illegal.

[CAcyclist]

13. Banks shouldn't have them at any rate

Bring back Glass - Steagall

[sarcasmo]

14. I agree.

[jmowreader]

50. Some derivatives definitely should be illegal

Any naked derivative, specifically the naked credit default swap, should be illegal. A naked CDS is an insurance policy taken out against an asset you do not hold any interest in. You can't buy an insurance policy against your neighbor's house, for obvious reasons. It is legal, though, for a mega corporation to take out naked CDS against its employees' mortgages the day before it fires all of them and sends their jobs to China--or, worse, on the day it fires them. (Any bets on whether anyone's actually tried this?)

Any derivative whose underlying instrument is or can be considered a derivative, should be illegal. Collateralized debt obligations are generally rated triple-A even though the most underlying instruments--the mortgages and credit card bills that were securitized in the first place--could be anything from balances on Gold Cards in millionaires' wallets to option ARMs written to people who flip burgers. The purpose in life of the CDO is to get rid of toxic derivatives after the More Balls than Brains Club hit their margin limits.

Also, selling derivatives on margin should be illegal. WAAAAY too much risk there.

But banning derivatives entirely? I don't think so; these days, a portfolio of even modest homes is too expensive for one bank to finance. Ya gotta spread it out some, which derivatives do.

[eridani]

105. Could you or anyone write a law that would distinguish between

--the comparatively small number of derivative types that don't pose serious risks from those that do?

[jmowreader]

110. Since there are a comparatively small number of derivative types, yes

There are in reality only three kinds of derivatives:

Asset Backed Securities have consumer or business loans underlying them. These can be divided into "asset backed securities," which have non-mortgage debt underlying, and "mortgage backed securities," which have mortgages underlying.

Collateralized Obligations have other derivatives underlying them. There are "collateralized mortgage obligations," which have only MBS underlying, but those are exceptionally rare; most guys writing collateralized obligations write Collateralized Debt Obligations which can contain anything--asset-backed securities, mortgage-backed securities, credit default swaps, other CDOs, whole mortgages, the secretary's personal checking account, gold bars, bricks of heroin--anything! (Most people wouldn't put heroin in one because it's kind of illegal, but thanks to the CFMA there's really nothing save the illegality of the item to prevent it.)

Credit Default Swaps are insurance against the failure of their underlying instrument. There is no requirement that you own the underlying instrument.

All the weird economy-destroying derivatives out there are one of these three things.

You couldn't write a law that would distinguish between a world-destroying MBS and a non-world-destroying one but you COULD very easily write a law that would stop the bad ones from being written: require all derivatives (which are legally considered to be bonds) to be rated the same as the lowest-rated security in the entire tranche. The biggest problem we have had so far is the rating agencies: they will rate a MBS with $10 million in liar loans underlying AAA, for some unknown reason. Half the MBS out there should carry C ratings or worse, but Standard and Poor's will rate them as investment grade. This allowed the institutional investors who are forbidden by their charters to buy anything but blue-chip bonds to join the More Balls than Brains Club. With a proper rating only serious gamblers would have played in this market, not people who THOUGHT they were buying safe bonds. (Read the prospectuses on some of them: if you weren't a derivatives specialist you wouldn't have known what you were dealing with, and that's the point.)

[eridani]

112. I take it that Dodd-Frank didn't come anywhere near doing this? n/t

[No Elephants]

114. You don't have to spread it via derivatives, though. You (bank) could simply sell one or more

mortgages, or grant fewer mortgages to begin with. Banks have done one or both of those things for forever.

Of course, granting fewer mortgages would cost you loan fees and open up room for a competitive bank, which might create better deals for consumers.

[plumbob]

51. Yes, they should. They are gambling, plain and simple.

AND without having to take the consequences -good old unca Sugar will be there with the bailout for the bank losers - for people, not so much.

[truedelphi]

67. Glass Steagall should have been re-instated during the "initial"

TARP.** Funny, isn't it, how Geithner pushed against the concept.

And now some 89 Trillions of dollars later, the public is still holding the bag for the Biggest Wall Street gambling entities that the world has ever known.

** The "initial" TARP was actually the second TARP, as during the period of 2007 to Fall of 2008, Bush's economic people had quietly bailed out some of the banking segment. To the not-so-quiet tune of over $ 150 Billions of dollars.

[No Elephants]

102. Why return to something that worked beautifully for well over half a century?

[customerserviceguy]

98. Fairy-dust securities

That's what I call them.

[No Elephants]

103. State securities laws are referred to as "blue sky laws."

Origin of the term Blue Sky in a securities context

Its earliest cited use by the United States Supreme Court was in an opinion by U.S. Supreme Court Justice Joseph McKenna in Hall v. Geiger-Jones Co., 242 U.S. 539 (1917), a case that addressed the constitutionality of state securities laws. Oddly, McKenna is frequently (and erroneously) given credit for inventing the term, even though J. N. Dolley used the term when pushing for passage of the Kansas statute in 1910, and McKenna's own opinion in Hall itself attributes the term to an unnamed, earlier source:

The name that is given to the law indicates the evil at which it is aimed, that is, to use the language of a cited case, "speculative schemes which have no more basis than so many feet of 'blue sky'"; or, as stated by counsel in another case, "to stop the sale of stock in fly-by-night concerns, visionary oil wells, distant gold mines and other like fraudulent exploitations." Even if the descriptions be regarded as rhetorical, the existence of evil is indicated, and a belief of its detriment; and we shall not pause to do more than state that the prevention of deception is within the competency of government and that the appreciation of the consequences of it is not open for our review.

Kansas banking commissioner Dolley, railing against "blue sky merchants" when pushing for passage of the Kansas statute in 1910, observed that certain fraudulent investments were backed by nothing but the blue skies of Kansas. The Oxford English Dictionary has a cited use dating to 1906. Also, The New York Times (and other national newspapers) frequently reported on the blue sky laws as various states began to enact them between 1911 and 1916. The newspapers expressly used the term blue sky to describe the laws.

http://en.wikipedia.org/wiki/Blue_sky_law#Origin_of_the_term_Blue_Sky_in_a_securities_context

[Renew Deal]

4. So is this permitted or not, and who has legal standing to challenge it?

:shrug:

[Roland99]

8. Guess it's all subjective. Are they "toxic" or "good" derivatives?

As a general rule, as long as transactions involve high- quality assets and don’t exceed certain quantitative limitations, they should be allowed under the Federal Reserve Act, Omarova said.

But that doesn't seem to be what BoA is doing w/Merrill's trash.

[wordpix]

83. maybe we the people should claim WE have standing since we're expected to pay out for FDIC banks

[enough]

5. Good analysis of this at Naked Capitalism this morning:

http://www.nakedcapitalism.com/2011/10/bank-of-america-deathwatch-moves-risky-derivatives-from-holding-company-to-taxpayer-backstopped-depositors.html

[Roland99]

7. Good link...esp. this update he made >>>>

Update: Brett in comments raise the question that since JP Morgan books virtually all of its derivatives in a depositary, is this really all that sus?

The short answer is that while this on paper looks similar, in fact the JPM derivatives exposures (and those of the other big banks) are pretty different than those of Merrill. The big commercial banks traditionally were the big players in plain vanilla, low margin derivatives, specifically interest rate and FX swaps. They are ALSO in credit default swaps, so there is no denying that there are risky derivatives included in the mix.

JPM runs a massive derivatives clearing operation, and a lot of its exposure relates to that. This and the businesses of the other large banks have been supervised by the regulators for some time (you can argue the supervision was not so hot, but at least they have a dim idea of what is going on and gather data). By contrast, no one was supervising the derivatives book at Merrill. The Fed long ago gave up supervising Treasury dealers, and the SEC does not do any meaningful oversight of derivatives. And Chris Whalen confirms that Merrill was and is the cowboy among derivatives dealers.

You can argue that this is just normal business, the other big banks have their derivatives operations largely in the depositary. But BofA has owned Merrill for over a year and a half, and didn’t undertake this move until it was downgraded. Goldman and Morgan Stanley reamin big players in this business and don’t have a large depositary. If this was all normal business, BofA would have done this a while ago, and not in response to market pressure, and they would have gotten the FDIC on board. The way this was done says something is amiss.

[Ian David]

6. BofA Deathwatch: Moves Risky Derivatives from Holding Company to Taxpayer-Backstopped Depositors

BofA Deathwatch: Moves Risky Derivatives from Holding Company to Taxpayer-Backstopped Depositors
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2142825

[Hotler]

9. "Time to call Congress critters." It will not do any good.

They do not give a shit about the little people one bit. The people were against bailing out the banks 200-1 and they still turned around gave them our money. I have no hope. I see no future.
k&r

[democrat_patriot]

10. Didn't BoA just make 4 billion in profits? That money should buy these things back.

For starters. Than bonuses pay into buybacks for as long as it takes.

Now OWS can occupy BoA and that'll get the word out.

[Roland99]

11. Their "profits" weren't really profits >>>

Bank of America Posts Adjusted Loss Excluding "Benefits" From Spread Blow Up

http://www.zerohedge.com/news/bank-america-posts-adjusted-loss-excluding-benefits-spread-blow

[Celefin]

26. Hmm... 4678.5 years to pay that back at the 4 billion/quarter profit rate

...assuming of course that they actually made a profit and not just used accounting tricks.
Which is what they did.

Derivatives trading ought to either be completely illegal or completely removed from banking.
It should be illegal to call gambling for 'financial services'.

[rhett o rick]

109. That can easily be reduced to 4, 600 years if they just raise some fees. nm

[99th_Monkey]

49. "Now OWS can occupy BoA and that'll get the word out." YESSSSS. That would do it!! ~nt

[wordpix]

84. I'm for that!

[KansDem]

12. "$75 trillion of derivatives at the end of June."

:wow:

Investopedia explains Derivative
Futures contracts, forward contracts, options and swaps are the most common types of derivatives. Derivatives are contracts and can be used as an underlying asset. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a particular region.

Derivatives are generally used as an instrument to hedge risk, but can also be used for speculative purposes. For example, a European investor purchasing shares of an American company off of an American exchange (using U.S. dollars to do so) would be exposed to exchange-rate risk while holding that stock. To hedge this risk, the investor could purchase currency futures to lock in a specified exchange rate for the future stock sale and currency conversion back into Euros.

investopedia

:wow:

[valerief]

15. Unholy shit! I wonder if this will be covered by the MSM for more than a blip if at all. nt

[Ganja Ninja]

16. It's time to step in and take over B of A.

Let the holding company fail and put the bank in receivership if that's possible.

[UpInArms]

17. JPMorgan Chase has $79 trillion in derivatives - between these two

oogly-moogly monstrosities - that is more than $150 trillion in junk/wrapped horseshit (which may have more value)

:scared:

[Roland99]

19. at least it's wrapped in 24k foil!

:hi:, UIA! How ya been?

[UpInArms]

27. good - busy

:hi: back at you Roland!

still fighting the fight here in the Midwest :D

[Aerows]

18. $75 Trillion

The GDP of the entire world is only $65T. If these toxic assets crash, just how on Earth do you think the Fed would get these covered? Yeah, they'd have to print money like crazy. There are $600T of these derivatives floating around, just waiting to crash. I swear, they are absolutely DETERMINED to destroy our economy.

If you think things are bad now, wait until the inflation that would happen if we had to cover those derivatives with printed money. This is insanity.

[cvoogt]

20. email potus & congress

I emailed the White House in disgust this morning. They have a handy contact form here

[truedelphi]

68. Be and sure to include a check for at least a mil dollars.

That's the only thing the Political Class responds to these days.

[corkhead]

21. The word "regulator" in this instance should include mandatory "air quotes"

and a wink

[Enthusiast]

35. Ain't that the damn truth.

[jwirr]

22. We need to stop this. First of all they are the ones who created these

risky accounts in the first place let them be the losers. Second, there IS a law against this. Third, just another bankster move. fourth, we need to get rid of Bernanke.

What is the matter with these idiots that they do not see how angry we are at just this type of moves? Or do they think they are above the law?

[Aerows]

24. They are doing things that will purposefully

crash the economy even worse than they did in 2008! I can hear it now "Economists say there was no way they could see this coming when BoA had $75 trillion in toxic derivatives crumble and require the FDIC to insure them."

Can't you just hear it now? "We didn't see this coming." Um, EVERYONE can see this one coming. This is another bailout waiting to happen. If we let this happen, and I'm not sure what we can do to even stop it, we are setting the stage for the total destruction of the economy. *I* see this one coming, and I'm certainly not an economist - I don't know why economists can't see this coming, unless they don't WANT to see it.

This is craziness.

[jwirr]

28. I think the run on BoA should come long before Nov. 5. And yes, I

agree that out congress will not have the guts to fight this and Holder will not look into it. Is this the last move before collapse of our whole economy or do we have a bit of time yet? And yes I know you cannot answer that. None of us can.

[Aerows]

30. I don't know if this is the last move before the collapse of our whole economy

But this will certainly have a hand in it if it goes through. It's outrageous.

This is on PURPOSE. No one with even a PASSING knowledge of finance, and mine certainly isn't much more than passing, could fail to see how big of a disaster this could, and probably will, turn into. How can ANYONE on Wall Street NOT SEE that this is a horrible idea? How can anyone in Washington NOT SEE that this has horrible, and far-reaching consequences?

[jwirr]

31. On PURPOSE: Disaster Capitalism.

[Devil_Fish]

80. Simple, All thouse fuckers on Wall St. (the 1%) are the ones betting on the crash. NT

[girl gone mad]

40. It would be beyond stupid to keep over the FDIC insured limits in Bank of America.

The derivatives counterparties get paid first if BoA goes bust. You'll lose your money.

I think even keeping an amount under the limit is taking a risk that your money could be tied up waiting for Congress to approve an FDIC bailout.

[Aerows]

54. If I had a BoA account

I'd be closing it ASAP.

This is just asking to give BoA another huge taxpayer funded bailout. If they get another one, the others will want one, too.

[Devil_Fish]

79. The one thing we all can do to stop this is pull our money out of BofA and Chase before the crash.NT

[nineteen50]

25. It's time

Please draft legislation dismissing all debt caused by banking
and Wall Street fraud. I am tired of fraud settlements that
are 100s of times less the their real damage. This only makes
fraud profitable and continuous

[SoapBox]

29. *sigh* MORE hijnks and shenanigans out of a "too big to fail" bank?

...it really is tiring.

[FreeBillClinton]

32. This should be the biggest story on every news outlet in the US

[Enthusiast]

37. Actually it should be.

And the ranks of OWS should be up around three or four million.

[Luciferous]

33. I can't believe they continue to get away with shit like this- K&R

[indepat]

34. It doesn't get much more special or corrupter than this: classic story of Federal regulators, except...

for the FDIC, protecting their bank clients rather than the public and promoting confidence in the banking system. Among corrupt, corrupter, and corruptest, this Fed decision ranks in the corruptest category of rancid decisions/actions. :patriot:

[Enthusiast]

36. "Three cheers for 1999's Gramm-Leach-Bliley Act which made all this possible!!"

And just imagine, Phil Gramm was presidential candidate John McCain's economic advisor. Gramm being the author of Gramm-Leach-Bliley. They designed that little bill to create profit out of thin air. Just look what they did to our once wonderful nation.

[Roland99]

38. Byron Dorgan (D-ND) vs. Gramm-Leach-Bliley

http://www.sourceoftitle.com/blog_node.aspx?uniq=464

[Enthusiast]

70. I have had that video saved for years.

If Senator Dorgan knew the danger why didn't the rest of the congress? Also I read a great article by Molly Ivins from the period. Apparently Molly understood the grave danger.

[No Elephants]

113. According to Senator Harkin, both Greenspan and Clinton put enormous pressure on Congress to pass

Gramm-Leach-Bliley, aka repeal of Glass Steagall.

(Clinton's Sec. of Treas., Rubin, was a former Goldman Sachs partner, much like Paulson, Dummya's Sec. of Treas, only Paulson was also Chair and CEO, while Rubin was "only" co-chair.)

For the record, Glass and Steagall were both classic Democrats and all of Gramm, Leach and Bliley are Republicans.

[Roland99]

115. Wonder how much they were all invested in Citigroup at the time?

Citigroup became a legal entity ex post facto after G-L-B was passed.

[cyberpj]

39. p.s. FIRED BofA EXECS GET $11M GOLDEN HANDSHAKE Oct 18 2011

With thanks to DUer steve2470 in the Economy Forum:

Tue Oct-18-11 04:09 PM
Original message
Fired BofA execs get $11M golden handshake

http://www.bizjournals.com/mobile/boston/news/2011/10/10/fired-bofa-execs-get-11m-handshake.html

Bank of America(NYSE: BAC) has plans to lay off tens of thousands, but at least two of the workers it’s cutting won’t have anything to complain about.

Bank of America is shelling out $11 million in severance to dismissed BofA executives Sallie L. Krawcheck and Joe L. Price. The two were dismissed Sept. 6. Krawcheck, formerly president of global wealth and investment management, will receive $6 million. Price, formerly president of global consumer and small-business banking, will receive $5 million.

The payouts were detailed in a regulatory filing posted by Bank of America Friday. The separation agreements were reached on Thursday, Oct. 6, according to the filing.

Krawcheck’s payout includes one year’s pay and benefits, equal to $850,000, plus a lump-sum payment of $5.15 million. Price is also to receive a year’s worth of pay and benefits, worth the same amount – plus $4.15 million in a lump-sum payment.

[Johnny Noshoes]

43. Nice very nice...

The company I worked for went bankrupt and all I got was my last measly paycheck, no severance, no COBRA and a "Sorry about that". Have I mentioned yet today how much I HATE THESE PEOPLE!

[cyberpj]

45. Similar sitch in my fam -

Grandfather worked 30+ years for a firm that went belly up and he lost it all - pension included - 2 years before retirement.

I just keep thinking that they KNOW who worked where at what position from the very start of all this and they also know who fled with millions in their pockets as the roof started falling --- if those millions came from knowingly faulty deals, I just don't understand why we can't draft a law, or recall the funds, or SOMETHING to make those who made the millions off of the fraud use that money to repay the debt they created!?!?

THEY did it - THEY should be paying for it, not profiting from it - a 2 year old knows that much!

And from now on there should be no financial 'markets' that any working accountant can't understand damn it!!
:rant:

[Raster]

48. Cyberpj, your poor Grandfather will end his life scraping to get by....

...meanwhile some bankster just built a new 3,000 sq. ft. addition to their Summer house in the Hamptons with the cash they looted from Grandpa's pension.

[cyberpj]

72. The sadder truth

is he drank himself to death while manning a city parking lot booth.

Unfortunately feelings of inadequacy and loss of value as a provider were stolen along with the funds.

Those effects will also accompany this recession for a long time to come.

[Raster]

92. cyberpj, my sincere condolences. And you are so right, more than just funds have been swindled...

...and stolen from the 99%. Far more than most will ever know.

[Ilsa]

65. These people are supposed to be the "talent" they need to run (ruin) the company?

Hell, I'd bet on a teacher or nurse doing a better job than these pricks. But of course, teachers and nurses are the ones seeing pay or earnings power decrease.

[wordpix]

85. THIS is the reason I refuse to buy stocks anymore. Execs get bonuses for laying people off

& bringing the company down.

[Gari]

41. I contacted all 3 reps

All 3 are big old R's, but maybe they will grow a conscience and remember they are public servants and do something. Hope springs eternal.

[Hawkowl]

42. Motherfuckers

If this is allowed to stand while paying out BILLIONS to bankers, the future of our society is very grim.

[SteveM]

44. Dem boy' in charge. They gots to let you know that. nt

[Raster]

46. This is GOLDEN:

"We are all shocked, shocked that Bernanke responded to the experiment by choosing to protect the BHC at the expense of the public."

[katty]

47. derivatives=spun cotton candy, it melts...fast

[sarcasmo]

75. Spun cotton candy is tasty, derivatives not so much :) .

[Duer 157099]

52. And when this all implodes, they'll blame OWS

I can't help but think that this will be the simplistic MSM explanation for when the whole thing comes tumbling down. It won't be a victory for OWS because the taxpayer will be stuck holding the bag, and John Q. Uneducated Public will think OWS crashed the economy.

Watch for it.

[Remember Me]

61. by what mechanism?

All their chanting distracted the bankers which caused them to commit fraud? and just accidentally try to make the taxpayers pay for it?

OWS isn't DOING anything and not even saying all that much, and DEMANDING -- which is what all the critics demand that they do -- nothing. Really, what could they even try to pin on them?

[Duer 157099]

63. In the minds of the simple non-educated American...

It will be very very easy to draw a connection. Talking about derivatives and complex financial instruments just makes them go blank, but tell them that some liberal anti-bankers made it happen (no matter the mechanism, won't matter) and it is a sound byte that will fly, and fast. In fact, some OWSers might even be happy to claim it, but that would be a major mistake when the effects are being finally realized.

[wordpix]

86. you mean the ones who were clapping for the repukes last night? I couldn't believe the stupid

[peacetalksforall]

53. There is only one good thing to come of this - people will be able to see that

the country is run by the Federal Reserve Board made of of the elite. Anyone who doesn't know that the Federal Reserve Board is NOT a government division - should stop and start over now. They are the ones referred to when we say 'elite'. The elite is bigger than just the board - it is also everyone living who was on the Board who are the same people who are not in legal firms, lobbying firms, government, academia, foundations, think tanks, corporations, consulting firms, secret agendas, military, intelligence. They keep circling around from position to position. Geitner Summer,Greenspan, Bernanke - but there are many whose name we don't know and many more whose name and face we don't know.

Wake up, stay awake, wake others.

[truedelphi]

69. + 10,000 n/t

[wordpix]

87. revolving door of financial wizards, brewing up their magic numbers

[Plucketeer]

55. Disgusting and Criminal

there needs to be a special jail to hold all these ass holes!

[a2liberal]

56. K&R (n/t)

[Uncle Joe]

57. Kicked and recommended.

Thanks for the thread, Roland.

[ThoughtCriminal]

58. I don't understand why I can't go to Las Vegas

and have the FDIC cover any gambling losses. Is it because the minimum bet to get gambling wagers covered is $10 trillion?

[McCamy Taylor]

59. Absolutely appalling. And will get zero coverage.

[No Elephants]

60. Rec'd and not alerted, despite violation of forum rule re: headline

[Remember Me]

66. what's the violation? nt

[No Elephants]

104. The thread title is not a verbatim quote from the headline of the original article.

The opening poster added "(must read)".

[soryang]

62. Get your money out.

Beat the crowd. Some analysts are predicting one of these too big to fails is going to fail.

[sarcasmo]

76. +1

[pam4water]

64. Marked to read later.

[PoliticAverse]

71. The Fed is not your friend... n/t

[ThomThom]

73. Bernanke needs to go, he knows those things are about to blow-up

He knows those things are about to blow-up and he is protecting his buddies. If someone doesn't stop this move, we the people will have to eat it. This really sucks!

[wordpix]

88. Bernanke had better right the ship, or he's going down first with BoA

Don't think he'll get off free

[Raster]

96. I'm sure President Hope and Change will help his boy out.

[Swede Atlanta]

74. This is enough for a revolution.........

Torch BoA everywhere figuratively of course but this sucks and unfortunately they will get away with it. That is what OWS is all about. BoA can get away with this shit and at the same time foreclose on someone who has fallen down on their luck by losing their job in a recession caused in part by BoA executives. All I can say is I hope the American people wake up and take back their country from corporate greed.

[Utopian Leftist]

77. They're not going to stop until we're all in the bread line.

All ninety-nine percent of us.

Yesterday I finally opened a new local account. I will close my BOA account as soon as I possibly can. The $5 per month they just added was the last straw for me. I am disabled and barely getting by below the poverty level.

And they already expect us to survive on so little, I honestly am starting to believe that there is something sadistic about American Conservatives. It is like they are happy to see their fellow citizens suffering, and in fact seem to achieve some kind of sickening sexual arousal by the fact that they have contributed to the suffering of the poor. I cut off my cable TV a few weeks ago. I won't be part of their vicious culture anymore either. I have been contributing what I can to the OWS movement, and will continue to.

We are the ninety-nine percent!

[Old and In the Way]

81. $75TT - $150TT dollars...that's a lot of funny money.

This is result of leveraging a few hundred billion mortgages/backed by hundreds of million of tangible assets? I'd say you take the derivatives and burn 'em. Let the banks sort it out...they've made the mess buying/selling/betting on the same paper between themselves. Reset the value to 0 and the financial institutions can explain it to their stockholders and figure out who owes who what.

I'm pretty sure this paper was marketed world-wide to investors, based on bogus ratings by rating firms who were in on the con, so that will complicate things considerably.

[wordpix]

89. that's certainly better than putting taxpayers on the hook for $75 trillion

:applause:

[salin]

90. Phil and Wendy Gramm - greedy couple that together set the legislative and regulatory

environment for decades of economic meltdowns with avenues for socializing the debilitating costs of the risk environment that the set.

Wendy Gramm (wife of Sen. Phil) was on the board of the commodity exchange commission that shortly before she left the commission set regs that said that large classes of speculative future commodities were not to be regulated by that board (leaving them completely unregulated.) Our (public) first gift was the growth of energy speculation leading to the gaming of the west coast (esp California) energy market, energy crises and the extraction of billions of dollars from the California economy.

Later lead to the development and grotesque growth of mortgage (with large swaths of subprime mortgages) CDOs sold as high yield investments (with NO regulation) and the housing and banking crisis.

Now Bank of America takes this whole insanity further. Forced US taxpayer bailouts via the FDIC by moving their extremely risky (and High debt obligations) away from their investment banking side and into their depositors side. Next bailout would be automatic per covering up to 250k per money in FDIC insured saving accounts.

Move their likely debts to depositors (the biggest F-Y yet to how little they think of their traditional banking services) and trust that if/when those debts come due - that bank customers deposits will be covered by the FDIC (tax payers). Meanwhile - their executives get ridiculously large salaries and bonuses for racking up such risk for the bank.

I can not imagine leaving any money in this bank in terms of checking or savings. The new fees for atms are small potatoes now, per why this bank is not a place to leave ones' savings. They have just put BIG debts into the pool with peoples savings.

If they get away with this, I imagine all of the other major banks will follow suit.

If ever a current event were to exemplify the "Why" behind OWS - this is it. And the Fed apparently backing it (my read is the only real fight is the FDIC) only will make the calls, that until now I viewed as right - Ron Paulian fringe calls, for "End the Fed" grow louder.

This is a very important event.

[Raster]

97. Phil and Wendy Gramm have helped the bankster looters for years.

I lived in Texas when Gramm was a Senator. He was dirty then and even dirtier now.

[dd2003]

91. This is the same thing I posted yesterday

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2142825


Dont mind the attention being brought to the article though. People need to see what is being done.

[CoffeeCat]

93. I remember Elizabeth Warren saying...

...that the Federal government didn't have enough money to insure bank deposits--should one of the
large banks fail.

I specifically remember her discussing this during the 2008 crisis. I will try to find links.

With that said, I can't even IMAGINE having one dime in Bank of America or in any bank that is
owned by or has any relationship with Bank of America. I would get out NOW.

I read this article--and I wonder how Bank of American can have ANY money in it right now!!

Seriously! Will this bank exist in the next 72 hours? I smell bank runs.

For the life of me, if I had an account there, I'd be camped out in the parking lot now--waiting
for the doors to open, so I could withdraw my money.

Does anyone else feel like the ground underneath BofA is about to shift?

[We are Devo]

107. Closing accts.

It can take a while to close an acct., esp. if you have e-banking set up and payroll deposits. My bf is finally going to open a CU acct. soon, and start the migration from BoA. I've been on his ass to do it for the past year, time has come today!

[McCamy Taylor]

95. To me, this looks like desperation. Bank of America is probably going broke

and it is hoping that the U.S. taxpayers will pay off its debts to the rich and famous (as well as its own executives losses). Because no bank in its right mind would ask for a bailout right now, not with America occupying Wall Street.

[quakerboy]

99. so if FDIC is contesting it

does that mean if they go forward with them, FDIC can remove its coverage for BOA consumers? What power does FDIC have?

[defendandprotect]

100. kr

[kimsarah]

101. The hits just keep coming!

3 reasons Wall Street banksters will likely never see jail:

1. On Wednesday, Citigroup and the SEC agreed to a settlement:
Reuters -- Citigroup Inc will pay $285 million to settle charges that it defrauded investors who bought toxic housing-related debt that the bank bet would fail, the U.S. Securities and Exchange Commission said on Wednesday.
The SEC said the bank's Citigroup Global Markets unit misled investors about a $1 billion collateralized debt obligation by failing to reveal it had "significant influence" over the selection of $500 million of underlying assets, and that it took a short position against those assets.
Link: http://www.reuters.com/article/2011/10/19/us-citigroup-sec-idUSTRE79I4TL20111019

2. Also Wednesday, Reuters announced the states and top banks are nearing a settlement in the mortgage abuse case:
WASHINGTON (Reuters) - Talks between U.S. states and top banks over mortgage abuses are nearing agreement on a major sticking point that has bogged down settlement negotiations for more than a year.
A deal could be reached by the end of the month, according to three people familiar with the talks.
Under the proposed terms of the settlement -- which could total $25 billion -- banks would get broad legal immunity from state lawsuits in exchange for refinancing underwater loans, those mortgages where borrowers owe more than their homes are worth, the sources said.
Link: http://www.reuters.com/article/2011/10/18/us-financial-regulation-mortgages-idUSTRE79H7P820111018

3. My favorite -- Kay Hagan and John McCain's bill to allow U.S. companies to bring back $1.4 trillion from overseas accounts home during a corporate tax holiday that would forgive the 35 percent corporate tax rate for one closer to 8 percent. It is supposed to entice companies to create jobs.
--Published October 05, 2011 | Dow Jones Newswires
WASHINGTON (Dow Jones)--A bipartisan pair of senators plans to introduce on Thursday a bill proposing a tax break for U.S. companies that bring home foreign profits.
Sens. John McCain (R., Ariz.) and Kay Hagan (D., N.C.) will co-sponsor legislation that would create a repatriation tax holiday, reducing the corporate taxes that U.S. multinationals would pay when bringing home overseas profits, in an effort to boost the economy. Their bill, called the Foreign Earnings Reinvestment Act, would create an incentive for companies to bring back an estimated $1.4 trillion currently kept overseas, according to an advisory from their offices.
Congress previously passed a repatriation tax break in 2004, billed then as a one-time fix.

[Roland99]

106. re: #3...yeah...that'll create jobs alright

maybe a few construction jobs as corporate execs reap bonuses from that repatriated money and build a new wing onto their mansions.

[rhett o rick]

108. Time for the government to take control of Bank of America. Pass it on. nm

[robertpaulsen]

116. The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System

The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System

Most people have no idea that Wall Street has become a gigantic financial casino. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end.

The word "derivatives" sounds complicated and technical, but understanding them is really not that hard. A derivative is essentially a fancy way of saying that a bet has been made. Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion.

Keep in mind that the GDP of the entire world is only somewhere in the neighborhood of $65 trillion. The danger to the global financial system posed by derivatives is so great that Warren Buffet once called them "financial weapons of mass destruction". For now, the financial powers that be are trying to keep the casino rolling, but it is inevitable that at some point this entire mess is going to come crashing down. When it does, we are going to be facing a derivatives crisis that really could destroy the entire global financial system.

more...

http://www.zerohedge.com/contributed/coming-derivatives-crisis-could-destroy-entire-global-financial-system

[Nihil]

117. Kick for a fascinating article.

Thanks for posting it (and, indirectly, for the subsequent links
concerning the committee of nine banks ...).

:toast: