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The Water Cooler
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Bank of America Is Too Much of a Behemoth to Fail
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<blockquote data-quote="Billybob" data-source="post: 1642998" data-attributes="member: 1294"><p>[Oct. 24 (Bloomberg) -- The Obama administration says the Dodd-Frank financial reform law ends too big to fail, meaning that no financial institution will ever again need to be bailed out. The promise is alluring, but its already proving to be false.</p><p></p><p>Consider the laws promise in the context of Bank of America Corp. Through the back door, U.S. regulators are facilitating another round of implicit bailouts, putting more taxpayer money on the line in the form of guarantees. Bloomberg News reported on Oct. 18 that regulators have allowed Bank of America to move highly risky derivatives contracts -- and the associated downside risk -- from Merrill Lynch into the insured retail deposit-taking part of the bank.</p><p></p><p>The move puts the Federal Deposit Insurance Corp. on the hook for any losses. The FDICs deposit-insurance funds come from its member banks, but because the agency can tap a U.S. Treasury line of credit if the fund runs dry, taxpayers could be at risk, too.]</p><p></p><p></p><p><a href="http://www.businessweek.com/news/2011-10-23/bank-of-america-is-too-much-of-a-behemoth-to-fail-simon-johnson.html" target="_blank">http://www.businessweek.com/news/2011-10-23/bank-of-america-is-too-much-of-a-behemoth-to-fail-simon-johnson.html</a></p></blockquote><p></p>
[QUOTE="Billybob, post: 1642998, member: 1294"] [Oct. 24 (Bloomberg) -- The Obama administration says the Dodd-Frank financial reform law ends too big to fail, meaning that no financial institution will ever again need to be bailed out. The promise is alluring, but its already proving to be false. Consider the laws promise in the context of Bank of America Corp. Through the back door, U.S. regulators are facilitating another round of implicit bailouts, putting more taxpayer money on the line in the form of guarantees. Bloomberg News reported on Oct. 18 that regulators have allowed Bank of America to move highly risky derivatives contracts -- and the associated downside risk -- from Merrill Lynch into the insured retail deposit-taking part of the bank. The move puts the Federal Deposit Insurance Corp. on the hook for any losses. The FDICs deposit-insurance funds come from its member banks, but because the agency can tap a U.S. Treasury line of credit if the fund runs dry, taxpayers could be at risk, too.] [url]http://www.businessweek.com/news/2011-10-23/bank-of-america-is-too-much-of-a-behemoth-to-fail-simon-johnson.html[/url] [/QUOTE]
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