Federal Reserve Now Backstopping $75 Trillion Of Bank Of America’s Derivatives Trades
October 19th, 2011Via: Daily Bail:
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.
This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.
What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.
Research Credit: ms
Bank of America just showed what a gutless, irresponsible, reckless, feckless idiot it is with this move.
Okay, shift your moronic, idiotic financial decisions on the taxpayer. Where is that going to get you BOA?
My answer: your own living hell.
Might as well fold up BOA. Just do it. And stop trying to screw humans with your greed.
You are NOT TOO BIG TO FAIL.
Cripe what’s wrong with you BOA? Can’t accept that you ARE REALLY NOT TOO BIG TOO FAIL?
Everyone fails at some point.
Close your operation down and accept your losses.
Let your pride down.
Its okay.
Stop hurting us with you state of DENIAL that you are no longer a GOING ENTITY.
Give UP!
Now that I have imbied more wine, I think this post – Kevin , means that we are flucked as humans. Yea, verily, like those poor suckass accountants that “happened” to be residing in their workplace at the Pemtagon,
where the “plane” blew them up, I think we’re are going to all wish we exactly what a debit versus a credit means these days. Oh my god.
That a BANK can just make a freaking JOURNAL entry and shift all there bad dude shit decisions on the taxpayers BLOWS MY MIND.
If I worked for the Gmint I’d be going in and talking to the accountants and managers at BOA and saying, whoa, dudes, this is not taxpayer thingy, and who’s in charge here? Send me to a warm body that I can talk to.
I have a good friend who has made a good living at BOA. CRAP I hope he has bailed off of this sinking PIRATE ship, that seeks to sink everyone but themselves.
OK. I’ve got multiple tabs open. I keep clicking back and forth between this article and the markets. Silver down about 1%. Gold and platinum each down about 2%. The dollar is only off about an eighth of a percent. If nothing else the Chinese should be dumping dollars as fast as possible.
So I check the other CNN. Exotic animals on the loose?! Did the banksters release them as a distraction? No mention of BOA derivatives. I check CNN’s “Money” section – surely that would cover such important news. Top story is how rare it is to get a mortgage at only 4%. (Money is free to the banks from the taxpayers so why couldn’t consumers borrow if from the banks for less than 4%?) The only other story about banks is that Morgan Stanley is reporting $2.2B in profits for the quarter.
Is everyone in denial or do they really not see that the entire system is now broken beyond any hope of repair? Have the people at the FRB or executives at Morgan Stanley no knowledge of history? Haven’t any of them heard of tar and feathers?