EMAIL SIGN UP!
The press releases posted here have been submitted by
For further information or to comment on this press release, please contact the organization directly.
Most Popular This Week
- US Is an Oligarchy Not a Democracy, says Scientific Study
- DOJ Investigation Confirms: Albuquerque Police 'Executing' Citizens
- What Do the Koch Brothers Really Want?
- Tutu: Climate Crisis Demands 'Anti-Apartheid-Style Boycott' of Fossil Fuel Industry
- Pulitzer Vindicates: Snowden Journalists Win Top Honor
Today's Top News
FOR IMMEDIATE RELEASE
CONTACT: Public Citizen
Public Citizen to Financial Regulators: Bank of America Poses a Grave Threat to U.S. Financial Stability, Should Be Broken Up
Petition Calls on the Federal Reserve and Financial Stability Oversight Council to Reform Banking Behemoth, Create Smaller, Simpler and Safer Institutions to Guard Against Financial Crisis
WASHINGTON - January 25 - Bank of America, the second-largest bank holding company in the U.S., should be broken up and reformed, Public Citizen said in a petition sent today to the Federal Reserve and the Financial Stability Oversight Council.
Public Citizen also sent a separate letter to financial regulators co-signed by 19 individuals, including economists and legal scholars, and by Americans for Financial Reform, Center for Media and Democracy, Demos, National People’s Action, Neighborhood Economic Development Advocacy Project, New Bottom Line, SAFER and U.S. Public Interest Research Group. The letter calls on regulators to investigate any threats posed by Bank of America or other large and complex financial institutions commonly known as “too big to fail” and to take all actions necessary to safeguard financial stability.
Public Citizen’s petition calls on regulators to use authority granted by section 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to reform Bank of America into a set of smaller, simpler and safer institutions.
Bank of America, which holds assets equal to roughly one-seventh of the country’s gross domestic product, is too large and complex to manage or regulate properly, the petition said. Moreover, its financial condition is poor and could deteriorate rapidly.
Near- and long-term financial indicators demonstrate the market’s unease with Bank of America and show that the bank is becoming increasingly unstable. In addition, Bank of America likely is undercapitalized, as it faces potential liabilities and market risks that could severely destabilize it.These liabilities could arise from the bank’s ongoing litigation and from exposure to financial instability in Europe.
An ongoing study by the Volatility Institute at New York University’s Stern School of Business confirms the danger posed by the bank: When looking at financial institutions’ contributions to systemic risk, Bank of America ranks first among U.S. financial institutions. The analysis shows not only that Bank of America is highly susceptible to financial crises, but also that it could “create or extend” a crisis.
“The bank poses a ‘grave threat’ to U.S. financial stability by any reasonable definition of the phrase,” said David Arkush, director of Public Citizen’s Congress Watch division. “If Bank of America in its current form were to fail, it would devastate the financial system. We’re asking the regulators to make sure that never happens. The only way to be sure is to reform the institution into something safer before any crisis materializes.”
The Federal Reserve and the Financial Stability Oversight Council should use section 121 of the Dodd-Frank Act – which gives the Fed the ability to mitigate the “grave threat” that a financial institution poses by limiting banks’ activities or forcing it to divest assets – to break Bank of America into separate institutions. If crafted properly, these smaller institutions would be less likely to fail, would not endanger the U.S. financial system in the event of failure and would be easier to liquidate in an orderly fashion should it become necessary, the petition said.
“The time to use section 121 is well in advance of a crisis,” said Micah Hauptman, Public Citizen’s financial campaign coordinator. “In the case of Bank of America, that means now.”