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Forum Post: BOA wants taxpayers to pay its 75 trillion in derivatives exposure.

Posted 8 years ago on Oct. 19, 2011, 12:50 p.m. EST by clif (4)
This content is user submitted and not an official statement

All over the net Bank of 'america' has moved its EU derivatives over to where it can trade them to the Federal Reserve (not part of federal govt, no reserves and not a bank) so that american taxpayers can be put on the hook for more than 11 times the gross domestic production of the PLANET!

a couple of sources for you...

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

then some human speak about what it means http://www.rumormillnews.com/cgi-bin/forum.cgi?read=218844

from article at site....a few choice words HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades

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.

22 Comments

22 Comments


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[-] 2 points by AndrewBWilliams (52) 8 years ago

I read that the derivative counter parties wanted $2-3 billion in additional collateral to back BofA's derivative exposures. It was apparently cheaper to transfer the assets to the depository side of BofA's banking empire where the bank is FDIC insured than come up with the extra good collateral. I suspect the Federal Reserve is afraid Bank of America is having troubles and may need a bailout but the Federal Reserve is concerned congress lacks the will for any more bailouts. This way they basically ensured a bail out will happen because if there is not a bailout the depositors will not get paid. Sounds very sneaky to me. This should be illegal, but I called all my congressional representatives and senators and they all basically yawned. Wall Street is bought and paid for and we are the chumps that keep getting the bill. These clowns need to be brought down, nationalized or something to get them under control.

[-] 1 points by emeflag (88) from Flagstaff, AZ 8 years ago

Here is in update about Bank of America transferring trillions of dollars of risky derivative investments to a FDIC-Insured subsidiary. The result of this action was to transfer risk to a government-backed bank and by implication tax payers, a perfect example of a too-big-to-fail financial institution abusing the system. This action has aroused the ire of people of all political persuasions. For more information please see the following links from news organizations that describe what is happening (see below).

Bloomberg Buisinessweek: http://www.businessweek.com/news/2011-10-23/bank-of-america-is-too-much-of-a-behemoth-to-fail-simon-johnson.html

Quote: "This condones the continuation, or perhaps escalation, of taxpayer-backed gambling on a grand scale -- and by people who aren’t very good at it. The U.S. is heading in the direction of Western Europe, where state-backed banks repeatedly bring everyone to the brink of disaster."

NY Post: http://www.nypost.com/p/news/business/sleight_of_hand_uy96iNSbW99JHMRnbxgvfL

Quote: "At issue is BofA’s decision to shift what sources say is some $55 trillion in derivatives at Merrill Lynch to the retail bank unit, which houses trillions in deposits insured by the FDIC. Critics say the move potentially imperils everyday depositors by placing their money and savings at risk should BofA run into trouble."

Finanical Times: http://ftalphaville.ft.com/blog/2011/10/24/710126/merrill-lynchs-derivatives-set-sail-for-safe-harbors/

Quote: "The way this was done says something is amiss."

[-] 1 points by StevenRoyal (490) from Dania Beach, FL 8 years ago

Good thing this is all legal. I wouldn't want to bailout any criminal activity. Plus they have the word America in their name. What could be more American than that?

[-] 1 points by number2 (914) 8 years ago

for those that don't think the fed is so bad, they are the ones allowing bofa to do this.

[-] 1 points by number2 (914) 8 years ago

If you bank there, withdraw all your money. Call your congressman and tell them that they will lose their job if they do not do something about this.

[-] 1 points by Karlarove (2) 8 years ago

Read "The Bank of American Taxpayers The Bankers Bank of Choice. This was done last Tuesday because of the stuff going on in Europe. The Federal Reserve banks and reserve members have huge conflicts of interest. They are the counter parties to these 75Trillion in derivaitve contracts and they want to be sure they will be paid. B of A was downgraded, and they want to be sure they will be paid, same thing happend in 2008 bailout. www.Karlarove.com "The Bank of American Taxpayer The Bankers Bank of CHoice. Wall Street spent $10 Billion over 10 years lobbying for deregulation and there is NONE in place to stop 2008 from happening again.

[-] 1 points by Karlarove (2) 8 years ago

Read "The Bank of American Taxpayers The Bankers Bank of Choice. This was done last Tuesday because of the stuff going on in Europe. The Federal Reserve banks and reserve members have huge conflicts of interest. They are the counter parties to these 75Trillion in derivaitve contracts and they want to be sure they will be paid. B of A was downgraded, and they want to be sure they will be paid, same thing happend in 2008 bailout. www.Karlarove.com "The Bank of American Taxpayer The Bankers Bank of CHoice. Wall Street spent $10 Billion over 10 years lobbying for deregulation and there is NONE in place to stop 2008 from happening again.

[-] 1 points by thebeastchasingitstail (1912) 8 years ago

truth

[-] 1 points by WildWeasel (32) 8 years ago

OWC Manifesto and/or list of issues/demands should include the following:

(1) First must-read: “The Price of Civilization: Reawakening American Virtue and Prosperity” Written by Dr. Jeffrey D. Sachs

http://www.npr.org/2011/10/18/141421746/income-disparity-and-the-price-of-civilization

http://www.amazon.com/Price-Civilization-Reawakening-Prosperity-ebook/dp/B004KPM1FS

(2) Second must-read: “Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens”

http://www.amazon.com/Treasure-Islands-Uncovering-Offshore-Banking/dp/0230105017

http://treasureislands.org/

http://www.democracynow.org/2011/4/15/offshore_banking_and_tax_havens_have

http://www.ethicalmarkets.com/2011/03/24/treasure-islands-uncovering-the-damage-of-offshore-banking-and-tax-havens/

[-] 1 points by enlightened (177) 8 years ago

That sounds a little unrealistic aren't rules and regulations to prevent that

[-] 1 points by progressive (3) 8 years ago

Wow. That is incredible. Should have nationalized BAC to begin with.

[-] 1 points by number2 (914) 8 years ago

huh? no. Let BAC bankrupt themselves not the nation.

[-] 1 points by tasmlab (58) from Amesbury, MA 8 years ago

When Warren Buffet recently invested big into BoA, do you think he knew he was buying into a bail-out?

[-] 1 points by enlightened (177) 8 years ago

Something stinks

[-] 0 points by jeivers (278) 8 years ago

Re-instate Glass Steagall and break up the "Too Big to Fail Banks"!!!

Glass-Steagall Act of 1933

The Glass–Steagall Act of 1933 was passed in reaction to the collapse of a large portion of the American commercial banking system in early 1933. One of its provisions introduced the separation of bank types according to their business (commercial and investment banking). In order to comply with the new regulation, most large banks split into separate entities. For example, JP Morgan split into three entities: JP Morgan continued to operate as a commercial bank, Morgan Stanley was formed to operate as an investment bank, and Morgan Grenfell operated as a British merchant bank.

[-] 0 points by Yepper (277) 8 years ago

Obama and his cronies in action. Nothing to see here move on.