Sleight of hand: BofA moves dodgy Merrill derivatives to bank (U.S. taxpayer on the hook for $55+T?)

The New York Post ^ | 2011-10-21 | Mark Decambre

[rabscuttle385]

A plan by beleaguered Bank of America to foist trillions of dollars of funky Merrill Lynch derivatives onto its depositors is raising eyebrows on Wall Street.

The rarely used move will likely save the bank millions of dollars in collateral but could put depositors’ cash behind the eight ball.

The move also brought to light fissures between the nation’s top banking regulators, the Federal Deposit Insurance Corp. and the Federal Reserve, in the wake of new regulations meant to curb the free-wheeling habits that fostered the worst crisis in a generation back in 2008.

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.

[rabscuttle385]

[TigersEye]

BoA needs to sign up more illegal aliens. Pronto!

[BenKenobi]

Only 20 trillion dollars of ‘breathing room’ worldwide. This is not good.

If they only get 33 percent payback, we’re all screwed.

[EGPWS]

So what would prevent depositors from just packing up their cash after seeing this news and moving it to Wells Fargo or the like?

[rawhide]

A congressional independent investigation needs to be done concerning BofA. Needs to be independent. No obamma/Rat influences! I hope Rep. Issa hears this!

[TigersEye]

It’s very bad.

[rabscuttle385]

So what would prevent depositors from just packing up their cash after seeing this news and moving it to Wells Fargo or the like?

Technically, nothing.

However, if Bank of America's retail bank fails, guess who's on the hook for the losses.

[DJ MacWoW]

Are You A Whining FReeper?

Got A Gripe So You Won't Donate?

Click The Pic

Isn't That Like Setting Fire To Your Own Home?

When FR Is Gone, Where Will You Go Then?

[Walmartian]

Here’s the culprit.
http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

[org.whodat]

If they have any money there it would be a damn smart move.

[Siena Dreaming]

The discussions about BofA’s move have created some tension between the FDIC and the Fed, with the Fed at one point accusing the deposit insurer of leaking BofA’s moves to the media.

Acting head of FDIC is now Obama's guy, having taken over from Sheila Bair.

He wouldn't act against BOA's interest, now, would he?

[org.whodat]

Wrong, the this crap was illegal, until phil gramm slipped gramm leach, into one of those, your have to read it to see what was in it bills, in the middle of the night, committee hearings on bill 0.

[Siena Dreaming]

Exactly what Dick Durbin, Obama’s fellow socialist from Illinois, would like to see happen.

[FReepaholic]

..So what would prevent depositors from just packing up their cash after seeing this news and moving it to Wells Fargo or the like?...

November 5: Bank Transfer Day

[Moonman62]

Only 20 trillion dollars of ‘breathing room’ worldwide. This is not good.

What makes you think the $55 trillion is a reliable figure?

[BenKenobi]

If it is, we are boned.

[Moonman62]

It isn’t reliable. It’s a notional value, which is good for nothing more than the press stirring up hysteria. Last week there was an article saying it was $75 trillion.

[upchuck]

The bottom line of every article I read about BoA:

The Bank of America is a criminal enterprise.

[TigersEye]

So is the federal government so I expect we’ll be hearing the word ‘bailout’ again real soon.

[PGR88]

The average American has no clue what this means, and even the interested and engaged American citizen will never be able to figure out exactly what this means.

Did the FED push them to do this? Why? How deeply involved is US Treasury Dept in this decision? Does it mean more bailouts (or QE) coming for BoA?