Bank of America's plan to shift bad Merrill Lynch derivatives to its retail banks will result in a situation that ties the FDIC's survival to BofA's. Hoisting the $55 trillion, yes that is trillion, onto depositors will save the bank millions of dollars in collateral but puts customer's money in danger of disappearing should BofA crumble. The move is in response to the bank's credit rating dropping recently.
So among the many shady things Bank of America has done in the past few years with depositors money, now they are putting their customer's savings at risk, as if illegal foreclosures and new fees were not enough. BofA's public relations department better get ready for major clean-up. While BofA's officials don't feel moving the $55 trillion in bad derivatives should be looked at as bad for the bank, the risk they are taking with customer's money is going to quickly become a boon to customer retention.
Bank of America's requested move has also caused bickering between the Federal Deposit Insurance Corporation and the Federal Reserve. The Fed has accused the FDIC of leaking BofA's business to the media. A private bank is trying to make a move that could mean the end of the FDIC and millions of dollars in customer money should the bank fold. If the FDIC did not speak out, Americans around the country would be infuriated when they lost their money and discovered the FDIC had concerns.
recommend
Facebook
Twitter
bookmark 
print
Comments: 10
The derivative shift will transfer the potential loss onto the American tax-payer if and when the FDIC needs to cover the loss.
Move the "toxic waste" in the hopes that BoA's stock price will improve so Warren can excercise his options.
And the majority of Americans have NO clue!
they do not insure bank assets - derivatives are assets, in the same way they do not insure banks loans, or banks purchase of any other asset.
they ...... insure ......... deposits .........................
what liar are you listening too and believing the crap they are selling.
by the way, i have a great bridge, a state, and a house i wanna sell .................
i know what fdic is, and what it does. obviously your 'source' has not a clue in the world.
retail bank side also includes all personal mortgages, car loans, personal unsecured loans, second mortgages, fed funds owned, investments purchased, repurchase agreements, letters of credit, real estate, equipment, accounts receivable, cash, and every other asset a bank has, which would include derivatives - and none are insured by fdic.
fdic only insures deposits, period. (as i said, hence the name).
in addition, fdic only insures the depositors - the liabilities of the bank that are owed to the public, not the depository (the bank).
for gawds sakes.
but transferring an asset from one subsidiary to another, is like moving a dime from one pocket to another - you still have the dime.
if the dime loses value, you still have the loss.
it is the same way with companies.
they already own the derivitives.
if there is a loss, the parent company has to pay first - does not matter which division/subsidiery owns it.
and losses on assets, do not effect deposits directly. the entire parent company would have to belly up for fdic to kick in.
if that were to happen, say with the morons trying to start a depositer run on them, then none of it will matter.
otherwise, when b of a does their consolidated financial statements (which are the only ones anyone looks at), a loss is a loss is a loss.
before believing someone with an agenda that apparantly hates banks, you would be better off to get your news, by going to a store, and 'pick up a star'.
i am very afraid for my kids and grandkids, that your source is correct.
in the meantime, JUST in case, i have non-hybrid seeds for 30 different vegatables and grains (enough to plant 5 acres), and hunting supplies that would last at least 10 years, along with a water source, 400 acres (200 wooded) plus plans and parts to make a dc generator.
pray to God i never have to use any of it.
Even if China kept buying Treasuries at a slower pace, we will have a crash of epic proportions. And it is a cinch, like any other panic, that China will be racing for the door as fast as all other creditors when they realize they stand to lose everything.