Forum Post: An Open Letter to the BoA CEO

Dear Mr, Moynihan,

What exactly possessed you to take on $53 trillion in Merrill Lynch derivatives in the first place? The whole point of what happened in 2008 was that synthetic CDOs of the sort that you guys held should never have rated the way they were; tranching them didn't reduce the risk (the way the ratings agencies seemed to think they did) but spread it around.

The first decent move you could have made when this mess started was to start sending out people to deal with distressed homeowners whose mortgages were tied up in your CDOs and start looking to write down the mortgages to something they could reasonably afford to pay, take the hit on your assets, and then talk to the feds about the situation. You guys make $15-20 billion in profit a year and almost twice that in revenue, and TARP gave you an additional $200 billion to work with. A controlled writedown system would have cost you but nowhere near as badly as the foreclosure mess has, and it would have also cost ordinary homeowners a lot less.

Failing to do that, you now figure that the best way to clean up after yourself is to put the financial equivalent of radioactive waste in the consumer banking divisiion, where the FDIC has to clean it up if something goes wrong. Excuse my boldness, but that's three and a half times our GDP you've just put us on the hook for. If those derivatives go south and the Fed winds up cleaning this up, you will have effectively beggared this nation for a good long time.

Sincerely Yours, An Angry OWS'er