Category Archives: BofA

Today Occupy Wall Street Held A March To Bank Headquarters

This is a video of OWS protesters marching to the Manhattan headquarters of Bank of America, Morgan Stanley, Wells Fargo, Citigroup and JP Morgan Chase.  When they arrived they threw paper planes they collected from the website Occupy The Boardroom.  Afterwords, they sent them in large bags to the banks.  

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Could Another Bail-Out For Bank of America Be On The Way

Bank of America is in the news yet again and of course not for a good reason. They are again trying to position itself for another bailout, and it is going under the radar of mainstrem media. A recent article came out in Bloomberg (available here) titled BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit

William K. Black of ThinkProgress describes this article:   

The thrust of their story is that Bank of America’s holding company, BAC, has directed the transfer of a large number of troubled financial derivatives from its Merrill Lynch subsidiary to the federally insured bank Bank of America (BofA). The story reports that the Federal Reserve supported the transfer and the Federal Deposit Insurance Corporation (FDIC) opposed it. Yves Smith of Naked Capitalism has  writtenan appropriately blistering attack on this outrageous action, which puts the public at substantially increased risk of loss.  

Bloomberg reports:  

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation… 

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. 

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show. 

If you recall, derivatives played a huge part in bringing down the financial system in 2008, and it was determined at that time that some derivatives should absolutely be eliminated. 

Remember the credit default swaps (per Naked Capitalism): 

They have virtually no legitimate economic uses (no one was complaining about the illiquidity of corporate bonds prior to the introduction of CDS; this was not a perceived need among investors). They are an inherently defective product, since there is no way to margin adequately for “jump to default” risk and have the product be viable economically. CDS are systematically underpriced insurance, with insurers guaranteed to go bust periodically, as AIG and the monolines demonstrated. 

We The People of Occupy Wall Street Want Justice – Time To Prosecute the Bankster Crooks

One of the recurring issues being raised by the Occupy Wall Street protesters is the lack of accountability by the Wall Street executives for taking our economy over the cliff.

In fact, they are now bringing in record profits with another round of record bonuses expected. Meanwhile not one person from Wall Street has been prosecuted with the exception of Madoff and a hedge-fund tycoon, Raj Rajaratnam, who was ordered to serve 11 years in prison for insider-trading. 

They have successfully escaped any repercussions from creating such things as credit-default swaps. Michael Greenberger, a law professor at the University of Maryland, explains: 

A credit default swap is a contract between two people, one of whom is giving insurance to the other that he will be paid in the event that a financial institution, or a financial instrument, fails. It is an insurance contract, but they’ve been very careful not to call it that because if it were insurance, it would be regulated. So they use a magic substitute word called a ‘swap,’ which by virtue of federal law is deregulated.   

Who was selling this? Banks like Bear Sterns, Lehman Brothers, AIG, Bank of America, and Citigroup. Yet not one executive from any of these banks has been arrested, charged, and prosecuted. How can that happen? It has something to do with the revolving door between our government and Wall Street. President Obama has chosen to surround himself with former Wall Street executives including former Goldman Sachs CEO Jon Corzine, Evercore Partners executive Charles Myers, Greenstreet Real Estate Partners CEO Steven Green, and Azita Raji, a former investment banker for JP Morgan. 

Tim Geithner was interviewed on CNBC yesterday and was asked about the OWS movement and their claims of the lack of prosecutions. He said that the Administration is getting right on the whole “prosecuting the people who defrauded the economy” thing. Geithner said action is on the way. “You’ve seen very, very dramatic enforcement actions already by the enforcement authorities across the U.S. government, and I’m sure you’re going to see more to come. You should stay tuned for that.”  

David Dayen of FireDogLake had his own version Geithner’s response: 

Let me rewrite that: “We moved within a year and a half of getting in office to put in place a relatively stronger set of rules of the game, in the sense that 1/8 is stronger than 1/16, across the financial sector. Now, we’re now facing a lot of resistance to those rules, and we’re accommodating that resistance by gutting the rules in implementation. We’re going to make sure that we deliver the promise of those reforms, or at least the promise we made to the finance lobby to back off and let them grow their way back to the top.” 

Unfortunately, I don’t see the Hope and Change candidate changing all that much. Saying that, I still think given the 2 parties and the candidate we have to choose from, Obama is still the better choice….but that is not saying much. 

I know there are people out there that will disagree saying he has tried, but keep in mind in 2008, he was swept in with a majority in both Houses, and even though he did have obstacles even within his own party, he chose to do nothing. He chose to ignore the crimes committed by Wall Street and as a result Eric Holder has done pretty much nothing.

Too Big To Fail – Wall Street Making Sure It Will Happen Again

The movie based on the extremely popular book Too Big To Fail by Andrew Ross Sorkin is coming out soon, and there was recently a screening in New York that was attended by our current Treasury Secretary, Tim Geithner. After the screening Geithner told the crowd that attended something that no one wanted to hear, he predicted another big crisis will be coming.  

“It will come again. There will be another storm, but it’s not going to come for a while. I’m certain we will” experience another catastrophe. He just couldn’t say when or what kind. “You will not know” when, which he is how he answered Sorkin when he tried to pin Geithner down. “It’s not going to be possible for people to capture risk with perfect foresight and knowledge.”

Keep in mind this is at a time when Republicans are trying to remove a lot of the oversight regulations that were instituted after the 2008 Wall Street crash. They are also opposing appointment of Elizabeth Warren to the Consumer Financial Protection Bureau, which was created to protect consumers, and are trying to weaken its regulatory power in order to protect corporations

A GOP bill that was proposed aimed to make it easier for the Financial Stability Oversight Commission to overrule decisions that the CFPB might make in favor of consumers. It would require a simple majority vote by FSOC, instead of a two-thirds majority.

Republicans argued that the changes the bill would produce would make the consumers’ bureau more transparent and accountable, and protect more small banks. Democrats contended that the revisions would only weaken the CFPB, and give financial institutions a stronger say.

To prove Democrats’ point, Maloney offered another amendment that would have defined the “safety and soundness” mentioned in the proposal to exclude profits. Her point was that consumer-friendly decisions generally come at the expense of profits, and — if profitably is a standard — there would be a ready rationale to overturn almost any CFPB rule or finding.

“I am not saying that a financial institution should not be able to make a profit,” Maloney said in the hearing. “I am simply saying that, if you are going to put an extraordinary check on the CFPB’s ability to protect consumers, then a financial institution’s profitability should not come at the expense of consumers.”

Capitalism Is Code For Corporate Socialism

With all of the pro-capitalism/anti-socialism chatter from the Republicans, it peaked my interest to find out the history of government funded bailouts in our capitalist society.

Below is a list of tax payer funded bailouts since the 1970s. It focuses on government bailouts of U.S. corporations (and one city). It does not include U.S. government aid given to other nations. The costs of the bailouts are given in 2008 U.S. dollars. After you review this, please tell me does capitalism, without oversight and regulations, really work.

Penn Central Railroad — 1970
Cost $3.2 billion

In May 1970, Penn Central Railroad, then on the verge of bankruptcy, appealed to the Federal Reserve for aid on the grounds that it provided crucial national defense transportation services. The Nixon administration and the Federal Reserve supported providing financial assistance to Penn Central, but Congress refused to adopt the measure. Penn Central declared bankruptcy on June 21, 1970, which freed the corporation from its commercial paper obligations. To counteract the devastating ripple effects to the money market, the Federal Reserve Board told commercial banks it would provide the reserves needed to allow them to meet the credit needs of their customers.

Lockheed — 1971
Cost $1.4 billion
In August 1971, Congress passed the Emergency Loan Guarantee Act, which could provide funds to any major business enterprise in crisis. Lockheed was the first recipient. Its failure would have meant significant job loss in California, a loss to the GNP and an impact on national defense.

Franklin National Bank — 1974
Cost $7.8 billion
In the first five months of 1974 the bank lost $63.6 million. The Federal Reserve stepped in with a loan of $1.75 billion.

New York City — 1975
Cost $9.4 billion
During the 1970s, New York City became over-extended and entered a period of financial crisis. In 1975 President Ford signed the New York City Seasonal Financing Act, which released $2.3 billion in loans to the city.

Chrysler — 1980
Cost $4.0 billion
In 1979 Chrysler suffered a loss of $1.1 billion. That year the corporation requested aid from the government. In 1980 the Chrysler Loan Guarantee Act was passed, which provided $1.5 billion in loans to rescue Chrysler from insolvency. In addition, the government’s aid was to be matched by U.S. and foreign banks.

Continental Illinois National Bank and Trust Company — 1984 
Cost $9.5 billion
Then the nation’s eighth largest bank, Continental Illinois had suffered significant losses after purchasing $1 billion in energy loans from the failed Penn Square Bank of Oklahoma. The FDIC and Federal Reserve devised a plan to rescue the bank that included replacing the bank’s top executives.

Savings & Loan — 1989
Cost $293.3 billion
After the widespread failure of savings and loan institutions, President George H. W. Bush signed and Congress enacted the Financial Institutions Reform Recovery and Enforcement Act in 1989.

Airline Industry — 2001
Cost $18.6 billion
The terrorist attacks of September 11 crippled an already financially troubled industry. To bail out the airlines, President Bush signed into law the Air Transportation Safety and Stabilization Act, which compensated airlines for the mandatory grounding of aircraft after the attacks. The act released $5 billion in compensation and an additional $10 billion in loan guarantees or other federal credit instruments.

Bear Stearns — 2008
Cost $30 billion
JP Morgan Chase and the federal government bailed out Bear Stearns when the financial giant neared collapse. JP Morgan purchased Bear Stearns for $236 million; the Federal Reserve provided a $30 billion credit line to ensure the sale could move forward.

Fannie Mae / Freddie Mac — 2008
Cost $400 billion
On Sep. 7, 2008, Fannie and Freddie were essentially nationalized: placed under the conservatorship of the Federal Housing Finance Agency. Under the terms of the rescue, the Treasury has invested billions to cover the companies’ losses. Initially, Treasury Secretary Hank Paulson put a ceiling of $100 billion for investments in each company. In February, Tim Geithner raised it to $200 billion. The money was authorized by the Housing and Economic Recovery Act of 2008.

American International Group (A.I.G.) — 2008
Cost $180 billion
On four separate occasions, the government has offered aid to AIG to keep it from collapsing, rising from an initial $85 billion credit line from the Federal Reserve to a combined $180 billion effort between the Treasury ($70 billion) and Fed ($110 billion). ($40 billion of the Treasury’s commitment is also included in the TARP total.)

Auto Industry — 2008
Cost $25 billion
In late September 2008, Congress approved a more than $630 billion spending bill, which included a measure for $25 billion in loans to the auto industry. These low-interest loans are intended to aid the industry in its push to build more fuel-efficient, environmentally-friendly vehicles. The Detroit 3 — General Motors, Ford and Chrysler — will be the primary beneficiaries.

Troubled Asset Relief Program — 2008
Cost $700 billion
In October 2008, Congress passed the Emergency Economic Stabilization Act, which authorized the Treasury Department to spend $700 billion to combat the financial crisis. Treasury has been doling out the money via an alphabet soup of different programs.

Citigroup — 2008 
Cost $280 billion
Citigroup received a $25 billion investment through the TARPin October and another $20 billion in November. (That $45 billion is also included in the TARP total.) Additional aid has come in the form of government guarantees to limit losses from a $301 billion pool of toxic assets. In addition to the Treasury’s $5 billion commitment, the FDIC has committed $10 billion and the Federal Reserve up to about $220 billion.

Bank of America–2009
Cost $142.2 billion
Bank of America has received $45 billion through the TARP, which includes $10 billion originally meant for Merrill Lynch. (That $45 billion is also included in the TARP total.) In addition, the government has made guarantees to limit losses from a $118 billion pool of troubled assets. In addition to the Treasury’s $7.5 billion commitment, the FDIC has committed $2.5 billion and the Federal Reserve up to $87.2 billion.

Corporate Takeover of America (well, actually the world)

Over the past 3 decades, corporations have steadily been monopolizing more and more power of our government. We all know they do this by funding/donating money to representatives for their campaigns, and once elected, well then our reps work for them. The very rich and the corporations are not going to give their money away for free; expectations always come with it.

I thought it was bad until the decision on the Citizen’s United case by SCOTUS. Now our government is almost completely controlled by special interest groups, corporations, and the extremely wealthy in our nation (for that matter in the world).

It is enraging to me and should be to every middle/lower class American the fact that our political system is completely funded by these people leaving us out in the cold. The only few options left to us are unions, which the numbers are dwindling, and our numbers and the ability to gather and protest. The only thing we have going is the fact that this kind of power rests in only a handful of people/corporations (in the thousands if not hundreds) and WE NUMBER in the MILLIONS.

Here is another disturbing reach for these “elites.” In Florida back in 2008, Charles Koch donated $1.5 million to Florida State University’s Economics Department to be given over 6 years equating to $250,000/year. For this donation Koch’s very own advisory committee will pick candidates to fill teaching positions that are funded by his donation. The candidates will have to be approved by Koch. This gives him complete veto power on any new hires.

Florida State University’s economics department needs to reconsider its relationship with billionaire Charles G. Koch, who pledged $1.5 million to the school as long as professors hired with the money hew to Koch’s Libertarian philosophy. The arrangement reeks of pandering and undermines academic freedom, the cornerstone of American higher education.

Under the terms of a 2008 deal with the Charles G. Koch Charitable Foundation, FSU’s economics department is scheduled to receive $1.5 million over six years to hire professors. But faculty members hired with foundation money must be approved by an advisory committee handpicked by Koch. That means Koch effectively holds veto power, an arrangement rarely found in the academic community and that threatens independent thinking.

The one thing the misguided and basically uneducated Tea Party has shown us over the past 2 years is we still can influence our representatives. We have one thing going for us that they don’t, brains. We know the issues, the politics and cannot be persuaded by false news/reporting. The corporations have to be stopped before we turn into The United States of Corporations.

BofA Says Not to Think of Your Home as an Asset

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Bank of America CEO, Brian Moynihan , said on Tuesday at the 2011 National Association of Attorneys General conference that homeowners need to look elsewhere for long-term investments rather than their home due to slow growth in population in certain areas.

“It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset. They should be thinking of it as a great place to live.”

Mr. Moynihan cited the situation of an Ohio customer who complained that his 100-year-old home was valued at $50,000. Mr. Moynihan said it would be valued as “some multiples of that figure” if located elsewhere, but due to population levels that have remained unchanged, the demand for homes in that state are low, which in turn drives down home prices.

Joe Rauch reported many attorneys general attended and are in the process of negotiating with BofA and other lenders about a settlement to allegations that the industry cut corners on foreclosures.