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Today's Top News
Break Up Bank of America Before it Breaks Us
On Monday, Bank of America (BofA) stocks briefly traded for under $5. Yes, you could buy a share of BofA for less than the noxious debit card fee they tried to force down your throat.
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BofA is massive, with assets equivalent to 15 percent of U.S. GDP. So why is it trading for the price of a latte?
Because Wall Street’s dirty little secret is that BofA is a zombie bank. Now the reek is getting too strong to ignore.
The Most Dangerous Bank In America?
In 2008-2009, BofA publicly took $45 billion in TARP bailout funds and secretly took another $91 billion in emergency Federal Reserve loans. According to Bloomberg News, it made $1.5 billion in profits off of those loans. Yet, several analysts predict that BofA is woefully short of capital reserves.
A recent study by NYU’s Stern School of Business ranks BofA as the most systemically risky firm in the United States. These analysts use public information and focus on the capital shortfall that would be experienced by the bank in the event of another crisis. BofA’s weak condition means it is a position to “create or extend” such a crisis.
As if this were not enough, recent news reports indicate that BofA is trying to move $22 trillion in derivatives out of its Merrill Lynch subsidiary into its FDIC-insured bank. The Fed favors the move (naturally). The FDIC, which provides insurance to depositors if a bank fails, does not.
In this pile of derivatives, could be all sorts of problems including bad European debt, the same kind of debt that brought down Jon Corzine’s derivatives firm, MF Global. Taxpayers don’t backstop MF Global. We do backstop BofA through the FDIC and the Fed.
Obama Promised to End the Era of Big Bank Bailouts
While public rage focused on the $700 billion TARP bailout bill at the height of the crisis, we have learned that far more went out the door from the Fed to aid the big banks. The Center for Media and Democracy tallies the bailout at$4.7 trillion under 35 federal programs. Bloomberg News puts the number closer to $7.7 trillion in loans plus guarantees, which generated $13 billion in profits for the banks.
With European Union countries teetering on the verge of default and no resolution in sight, the U.S. government needs to take decisive action to prevent another bailout of a major American firm – a move sure to generate explosive controversy in an election year.
When President Obama signed the Dodd-Frank Wall Street reform bill in 2010 he promised: “It will end taxpayer bailouts of Wall Street firms.”
Yet, the “resolution authority” included in the Dodd-Frank Wall Street reform bill requires a joint decision by a group of bank regulators to break up a systemically risky institution. Bank regulators, like Tim Geithner and Ben Bernanke, who strongly prefer zero accountability and unlimited bailouts.
Time for a Redo
While some on Wall Street frame the financial crisis as events of the distant past, the 99% understand that crisis hasn't ended for millions of Americans out of work. It hasn't ended for small businesses who can't get credit. It hasn't ended for the millions of Americans facing foreclosure. And now we learn that a new bailout of BofA could be in the works.
We learned from Ron Suskind’s new book Confidence Men that President Obama ordered the breakup of Citibank at the height of the crisis, but was stonewalled by Tim Geithner. The President's instincts were good. Now he has an opportunity for a redo.
Most American's have had it with bailouts of the big banks on Wall Street when so little has been done for Main Street. Banks that are "too big to fail" are too big to exist.
Tell President Obama, it’s time to break up BofA before it breaks us.
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37 Comments so far
Show AllObama promised to end the era of big banks bailouts? I'd like to file that promise in the unkept file, but there is no more room.
Bank of America along with many others hold money from the federal reserve they effectively pay nothing for, but they can't lower or return to mortgage rates that would allow people to retain their homes.
Bank of America can offer legal accounts to illegal residents but cannot extend some rebate on loan rates to American families.
Bank of America along with all the big banks give depositor's a return of less than 1% on their deposits but charge exorbitant mortgage rates and fee's to their customers.
Thank you Mr. Bush/Obama, Mr. Greenspan/Bernanke. Mr. Paulsen/Geitner and most of all to the republicans and democrats in Congress that works so diligently on their employers behalf.
Bottari's $7.7 trillion figure is low. Page 131 of a recent US Government General Accounting Office report (GAO 11-696) confirms that between the govenrment and the fed, US taxpayers are on the hook for $16 trillion, while Bof A and all of the other too-big-to-fail banks keep growing larger.
Thank you, Ray. You have a good handle on this thing...
The numbers are TOO BIG to EVER repay, and isn't that what the game/con is really about? Note that with these incredible numbers, as others in the CD forum have related, EVERY under-water mortgage could have been paid off. That would have left people IN homes, tons of equity in communities, a prosperous property tax base, and a more stable nation. Nah, it's too big to prosecute this elaborately engineered numbers game...
This "too big to fail" mantra also fits the U.S. military industrial complex. No matter how many nations it invades, leaving them torn to pieces and populated by orphans and widows, it can say it's too big to track the numbers of "collateral damage," or pay some sort of harm tax that might make these imperial "adventures" too costly to continue.
By paying less than pennies on the dollar, the high stakes banksters bought the politicians who would put their lackeys into key "regulatory" positions, while massaging law to let them get away with all the booty before anyone felt enough pain to demand that law be put back in place, and authorities held to account. There's no need to do even that when you can control the towers of power and relay the message 24/7 that it was those greedy minorities, demanding homes they couldn't afford, that sunk the economies of Amerika and much of Europe.
And chiming in, always ready to undermine those "illegal aliens" is Thomas More in his new screen name, bitty mouse.
Ah...the love is never lost!! Maybe it's written in the stars.
You are correct for a change...I do favor the American worker and do not care to support the corporate exploiters.
You still remember how to flatter me, too. Have a good Christmas. In spite of our generally diametrically opposed opinions, I really think there's a decent man that lives inside of you. It's kind of like beholding a massive chunk of clay, that if one had the right tools, they could scratch away all the crap and what would remain would be a statue to marvel at.
Now about those tools...
Of course he is a decent man. And you are a decent woman. We are all chunks of clay spinnning on the master potter's wheel. A creation in progress. Some works are more advanced than others but none are complete. All are becoming.....
Merry Christmas Siouxrose
Thomas Gilbert-
President Obama's speech in Kansas on 6 December is a textbook example of not only more meaningless hot air but of gross political deception. Almost every one of his "financial" arrows is directed at his own appointed regulators who have treated the miscreants with velvet gloves if they have touched them at all. For more read "Obama and the rule of law" on the site "War in Context" because you may then begin to wonder whether this man is really decent or merely sly.
Hi Crowsnest,
The system is certainly indecent. President Obama is the national face of that indecent system.
"because you may then begin to wonder whether this man is really decent or merely sly.'
My reference to decency had to do with a comment by our own Siouxrose, when, in response to Lefthome, acknowledged the decency inherent in one she usually stands in opposition to.
I am not sure if your reference with regard to decency/slyness has to do with President Obama or Leftthome. I was clearly referring to both Siouxrose and lefthome and not President Obama.
Perhaps you posted in the wrong place?
Take care
Thomas Gilbert-
Getting rid of all hierachy and thus all currency and power is the real solution, but right now, nationalization is the right solution short term for maybe a few centuries. Europeans are such slow learners.
Getting rid of all hierachy and thus all currency and power is the real solution, but right now, nationalization is the right solution short term for maybe a few centuries. Europeans are such slow learners.
"Europeans are such slow learners."
Not so compared to most USAns.
Hi Jennifer..
Just thought I would say hello. I do this from time to time...
Thomas Gilbert-
I wanted to say hello and happy holidays to all out there even though for the 99% the struggle continues-- me included.
But who were the USA's First Nations for so long as that old Spinners' song would put it? "Oh please believe me now/Come on and give this thesis a chance. . ."
That is an interesting idea to think about. In the meantime, I wished that this forum had a rating system ala disqus to give "likes" to comments.
"Now he has an opportunity for a redo."
Screw him. The only redo needed is the one from November of 2008. Fortunately that will occur somewhat soon – though not soon enough.
As for the banks, ALL of the large ones should be broken up & financial power given back at the local level.
And end the Fed. Its killing us (and everyone else too).
End the Fed and end the perpetual warmongering. Just STOP IT. Support Ron Paul.
The Fed is stealing our money in front of our eyes.
Occupy and break up Wall Street before it breaks us all. While breaking up B. of A. would be a start, it is only a small part of the Zombie, Wall Street problem.
Do not waste your time telling Obama to break up B. of A. Mary, you do not seem to realize that Obama is nothing but a Wall Street and MIC stooge!
Acuerdo, B of A IS the fascist bank... bankrolling fascist amerikas imperialism for decades ! B of A has murdered millions from Vietnam thru the ongoing terrorist acts of occupation and slaughter !
The handwriting was on the proverbial wall during the transition from Dubya, Cheney, & Co. to Obama when it came out that the Banksters would get their defenders in the White House in the form of Larry Summers and Timothy Geithner instead of Paul Volcker. In the spirit of the 'redo' that Mary Bottari calls for, a good start would be to turf out Geithner and put in Volcker. Even better would be to allow Volcker impose the austerity measures on the big banks that the former Fed chief called for in 2008. With the looming 2012 election and the resultant need for Wall Street $$$ for campaign funds, that is quite unlikely.
Obama's singular focus is to be the first politician to amass a corporate funded billion dollar campaign war chest. A redo on this or any other issue will impede Obama's fundraising efforts in meeting that goal in 2012.
If Geitner really stonewalled Obama's attempt to break up Citigroup, Obama has had nearly three years to replace him. Obama therefore owns that action 100%...no excuses.
I was not offering an excuse, merely an observation of what happened and what will likely continue to happen. As to place where the buck stops, Obama deserves full blame or credit (whatever word works for you) for foregoing what has proven to be prescient advice from Paul Volcker, and put in the sort of corporate / government fuck-ups whom consistently fail upwards (this is particularly true of Timothy Geithner) while helping shovel taxpayer $$ to their big business buddies.
Obama said many things, and supposedly ordered many things -- especially in public -- mere sound bytes for a sound-byte ADD electorate. The reality is behind closed doors. I haven't read Suskind's book yet. I read "The Price of Loyalty" a couple of years ago. Paul O'Neill seemed more than a decent guy who, I am sure, would never, ever entertain coming back to serve in D.C. again. I cannot imagine what he must think of the Obama.
I have a question about the following sentence from this article:
"President Obama ordered the breakup of Citibank at the height of the crisis, but was stonewalled by Tim Geithner"
How does a Secretary of Treasury "stonewall" a president? I thought that cabinet secretaries served under presidents.
As far as Obama's instincts, they were rotten all along. In fact, he actually bullied members of the "progressive caucus" in Congress to say "yes" to TARP in 2008. Anyone who wants to "tell Obama to break up BoA" can go right ahead. Those of us who know better, however, shall continue supporting real challengers to the status quo.
I have the same problem/question with the very sentence to which you bring our attention, Jennifer.
"President Obama ordered the breakup of Citibank at the height of the crisis, but was stonewalled by Tim Geithner"
That said, the sentence has been floating around in cyberspace and probably on M$M programming for a while -- at least a couple of months.
From the first time I read this piece of propaganda, I thought it was absolutely ludicrous!
I agree with you: "Those of us who know better, however, shall continue supporting real challengers to the status quo."
Sorry for belaboring the obvious point, JB, but this incongruous "stonewalled" reference is a variation of the meme that Obama is, or at least MAY be, a decent, conscientious, humane politician who is simply overwhelmed by institutional forces.
I certainly don't buy into the rationalization popular with gentle progressive-liberal apologists that Obama has sincerely fought to implement (or at least promote) true reform in various policy areas, only to be overpowered and squelched by the very persons he enthusiastically welcomed onto his team and empowered in the first place.
From what I know of Bottari through articles published here, she's not particularly an "Obamabot". And she's not taking the rationalization to the full extent of arguing that Obama has gotten a bum rap, as full-bore Obamabots do-- or even going so far as to recommend him as "the only adult in the room", to quote an apologetic talking point.
But, just as you suggest, she still seems inclined to give Obama credit on principle, in a way that implies that he's more to be pitied than censured.
I suppose that anyone who advocates appealing to Obama's better nature has to be convinced that he actually HAS a better nature. I'm not.
OS, thank you. I am a big fan of Bottari's articles and would never dream of her being anything close to an Obamabot unlike an earlier author who, not too long ago, wrote a lame article trying to justify disaster-care.
Kay, thank you for your response as well. I had no idea that the "Obama being stonewalled by Geithner" was floating around for months. Since Bottari mentioned this based on Suskind's recent book, I would like to know what makes Suskind somehow equate JFK with Obama when it comes to the insider issue.
P.S.: I am happy to see both of you still here even though I miss a few great posters who used to contribute and make discussions very interesting.
"Tell President Obama, it’s time to break up BofA before it breaks us."
--------------
I almost choked on my coffee when I read this... tell pres oblahblah...
yeah, right.. as if that would accomplish anything.
---------------
I don't know who (or even if) I'm going to vote for yet -- but it sure as hell is NOT going to be oblahblah.
Break up BofA? Ok...but only as a beginning.
"That is simple. In the Colonies we issue our own money.
It is called Colonial Scrip. We issue it in proper proportion
to the demands of trade and industry to make the products
pass easily from the producers to the consumers. In this manner,
creating for ourselves our own paper money, we control its
purchasing power, and we have no interest to pay no one."
Benjamin Franklin Explaining to Bank of England directors his ideas on why the colonies were so prosperous (1763)
the quote, often attributed to Franklin, is bogus -- http://www.garynorth.com/public/6882.cfm
That's really too bad. Thanks for the clarification.
Because bogus or not...it was still true.
"While some on Wall Street frame the financial crisis as events of the distant past, the 99% understand that crisis hasn't ended for millions of Americans out of work."
............The "distant past" for these cheeting bastards is micro-seconds with their high speed trading software.
Mary Bottari is just a wee bit out of touch.
Maybe Obama and his party will "break up" Bank of America when they go down to The Bank of America Convention in Bank of America's home town - Charlotte, North Carolina next year.
The only way these corporate owned zombies would dream of breaking up Bank of America would be if they could help it be consumed by some other toxic behemoth which would then create an even larger, more toxic bank.
Maybe Bank of America could consume itself and then become another level of virtuality beyond virtuality. Maybe they could call it the New and Improved Awesome American Bank of America Incorporated Beyond the Universe.
On second thought,
Maybe the title could be
The First Bank of Jesus Christ We're Rich.
Mary Bottari: " The Presidents instincts were good ". Mary, Mary, Mary you cannot be that naive! Like I said in my thread below, Obama is nothing but a Wall Street stooge and now that I have a little more time let me lay it out in more detail and even though I could write a whole book on the subject, I will try to keep this brief as possible. A few examples:
1. FRANKLIN RAINES. Raines was Chairman CEO at Fannie Mae. Raines was forced to retire from his position with Fannie Mae when auditing discovered severe irregularities in Fannie Mae's accounting activities, Raines left with a " golden parachute valued at $ 240 million in benefits. The Government filed suit against Raines when the depth of the accounting scandal became clear.
Franklin Raines currently works for the Obama campaign as his Chief Economic Advisor!
2. TIM HOWARD. Tim Howard was Chief Financial Officer of Fannie Mae. Howard was a strong internal proponent of using accounting strategies thyat would ensure a " stable pattern of earnings" at Fannie Mae. Investigations by Federal regulators and the company's Board of Directors since concluded that management did manipulate 1998 earnings to trigger bonuses. Howard resigned under pressure in late 2004. Howards golden parachute was estimated at $ 20 million.
Tim Howard is an assistant econonmic advisor for Obama under Franklin Raines.
3. JIM JOHNSON. Jim Johnson was a former excutive at Lehman Bros. and was forced from his position as a CEO with Fannie Mae. Investigators found that Fannie Mae had hidden a substantial amount of Johnson's compensation from the public, reporting that it was between 6 and 7 miillion when in fact it was $21 miilion. Johnson is currently under investigation for taking illegal loans from Countrywide while serving as CEO of Fannie Mae. Johnson's golden parachute is estimated at $28 million.
Johnson was hired as a senior Obama finance advisor and was selected to run Obama's V.P. search committee.
I rest my case!
If my boss (the one who hired me, remember) had ever asked me to do something, and I "stonewalled" him, guess how long I would last.