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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: 1643288" data-attributes="member: 1294"><p>Question; How does the Federal Reserve, (not part of the Gov,) "out rank" the FDIC which is part of the Gov.?</p><p></p><p></p><p>Bank of America Bosses Find Friend in the Fed</p><p></p><p>[<strong>The Federal Deposit Insurance Corp. is objecting to the transfers.</strong> That part is easy to understand: More risk for the retail lender means more risk for FDIC-insured deposits, which ultimately are backstopped by the U.S. government.</p><p></p><p><strong>The Fed, however, has signaled to the FDIC that it favors the transfers.</strong> Shifting the derivatives to the commercial lender may let Bank of America avoid collateral calls and termination fees stemming from the rating downgrade. Some Merrill clients may prefer having their contracts with the higher-rated unit. In short, the Fed's priorities seem to lie with protecting the bank-holding company from losses at Merrill, even if that means greater risks for the FDIC's insurance fund.]</p><p></p><p><a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/20/bloomberg_articlesLTBZHS1A1I4J.DTL" target="_blank">http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/20/bloomberg_articlesLTBZHS1A1I4J.DTL</a></p></blockquote><p></p>
[QUOTE="Billybob, post: 1643288, member: 1294"] Question; How does the Federal Reserve, (not part of the Gov,) "out rank" the FDIC which is part of the Gov.? Bank of America Bosses Find Friend in the Fed [[B]The Federal Deposit Insurance Corp. is objecting to the transfers.[/B] That part is easy to understand: More risk for the retail lender means more risk for FDIC-insured deposits, which ultimately are backstopped by the U.S. government. [B]The Fed, however, has signaled to the FDIC that it favors the transfers.[/B] Shifting the derivatives to the commercial lender may let Bank of America avoid collateral calls and termination fees stemming from the rating downgrade. Some Merrill clients may prefer having their contracts with the higher-rated unit. In short, the Fed's priorities seem to lie with protecting the bank-holding company from losses at Merrill, even if that means greater risks for the FDIC's insurance fund.] [url]http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/20/bloomberg_articlesLTBZHS1A1I4J.DTL[/url] [/QUOTE]
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Bank of America Is Too Much of a Behemoth to Fail
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