Wednesday, October 19, 2011

Boycott Bank of America

I've had it. Trying to hijack the rule of law (via our state AGs) was bad enough. Initiating a back-door TARP (via state-owned Fannie Mae) was even worse. But a third stealth taxpayer-funded bailout is just too many. Three strikes, you're out.
Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.
The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties... The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.
Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.
“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”
In the words of Bruce Wayne, the details of this ridiculous bailout attempt are "a bit technical," so I'll put it in layman's terms for you--Bank of America just backed a pickup truck full of toxic horseshit from its investment bank into your backyard, and dumped it all there. Now it's your job to clean it up.

This is an absolute joke, and it's not even close to legal. The FDIC does not exist in order to backstop failed bets from investment banks and trading desks. Attempting to use the taxpayer-backed institution that way is nothing short of theft, and all Americans (not just BofA account holders) should be furious--the FDIC itself already is.

The fact is, the "toxic assets" that caused the financial crisis of 2008-09 never actually went away--they were simply hidden from the public view via a suspension of mark-to-market accounting (itself a borderline crime via accounting fraud). These assets have bounced around for a couple of years, never regaining value, and now the banks are trying to park them in your backyard--if you still have one.

The banks (and their cronies at the Fed, and the politicians whose campaigns they've funded) have consistently gambled that you won't understand the technical details of the fraud, and therefore won't be upset. So far, they've been disturbingly correct, and they've gotten away with pointing a gun at the head of the taxpayer time and time again by threatening "financial Armageddon". But things are changing, and Occupy Wall Street (OWS) is the result--these people may not now exactly how they've been robbed, but they certainly know the results, and they're fed up.

Of course, there are those who have tried to brand the OWS people as "socialists" or "Marxists". I can hardly conceive of a more offensive (and flagrantly false) depiction. While there may be pockets of whackos involved here (just as there were in the Tea Party--eventually, the fringe hijacked that movement), the core values of the movement are anything but socialist. At the center of OWS is a demand that these socialized institutions be held responsible for their losses, and not be backstopped by the government or taxpayers. How is it socialist to demand equality under the law, and to demand that bad banks be allowed to fail?

Occupy Wall Street is, ultimately, a revolution against the concept of "Too Big To Fail"--that very concept is, indisputably, anti-capitalist. A system that does not allow an institution to fail even when the market has said that it must is hardly capitalist--it's socialist. It requires an amazing act of mental gymnastics to suggest that opposing socialist acts... is somehow Marxist. But this is what our banks and politicians are trying to do.

If you've got assets with Bank of America, don't wait until November 5th. Pull them now. No, don't pull it for the traditional "is my money safe?" reasons. Pull it to send a message that you refuse to backstop bad bets by investment bankers, that you refuse to subsidize their ridiculous salaries, and that you refuse to continue to be a part of this badly broken system.

Bank of America put themselves in this situation. It's not your job to save them, and if you do, you're only paving the way for more bailouts (and $5 debit card fees) in the future. The extortion must end now.


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