Matt Taibbi: Pull Your Money Out of Bank of America
FILED TO: Politics
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Matt Taibbi suggests ‘Occupy Wall St’ add another very specific policy to their agenda; get people to pull their money out of Bank of America:
When it comes to commercial banking, Bank of America is as bad as it gets.
The markets, of course, have lately come to agree, as B of A has lately been downgraded again to just above junk status. The only reason the bank is not rated even lower than that is that it is Too Big To Fail. The whole world knows that if Bank of America implodes – whether because of the vast number of fraud suits it faces for mortgage securitization practices, or because of the time bomb of toxic assets on its balance sheets – the U.S. government will probably step in to one degree or another and save it.
The government’s patronage of the bank was never clearer than in recent weeks, when B of A quietly decided to move trillions of dollars (trillions, not billions) in risky Merrill Lynch derivatives contracts off Merrill’s books and onto the books of the parent/retail arm, Bank of America.
This decision was done at the behest of counterparties to those transactions, who wanted those contracts placed under the aegis of Bank of America, whose deposits are insured by the FDIC. The move was made, according to reports, so that Bank of America could avoid posting $3.3 billion in collateral to satisfy the company’s creditors. In other words, Bank of America just got You the Taxpayer to co-sign as much as $53 trillion worth of dicey derivative contracts.
This essentially means that Bank of America gets to gamble lots of money and never risk losing it – a classic example of crony capitalism at its ugliest. The public has unwittingly signed on to bail them out if it all goes pear shaped, and given the complete lack of serious regulatory policy coming from the White House and Fed, it’s almost a given that it will.
Taibbi argues that pulling your money out of BofA will send a powerful message to Washington that this type of behaviour is no longer acceptable. The public cannot allow the banks to hoodwink them into paying for their gambling addiction any longer, and the best way to do this is to cut their funding directly.