Bank Of America Dumps $75 Trillion In Derivatives On U.S. Taxpayers With Federal Approval

http://seekingalpha.com/article/301260-bank-of-america-dumps-75-trillion-in-derivatives-on-u-s-taxpayers-with-federal-approval ^

[TigerClaws]

Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.

[jessduntno]

“Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.”

I’m no real estate expert, but I’d say that is a lot.

[Kartographer]

“Dead Beats” FUALT!

[Mr. K]

Um... The GOVERNMENT is accepting this crappy deal

and ONLY the government is big enough to do something this stupid.

If the government is stupid enough to do it, I don’t blame the banks for taking advantage of it. They have to live in the real world of existing rules.

[Red Badger]

Is there that much money in the entire world?..........

[major-pelham]

There is ZERO chance the net obligation is anything like that. Surprised Alpha isn’t clear on that.

[vanilla swirl]

Oh I’m sure we’ll be able to suck that up in no time/sarc

[central_va]

Every $5T in todays dollars represents the amount of money spent by FedGov™ on WWII in the 1940’s.

[liberalh8ter]

I find it difficult to believe there is 75 trillion worth of vacant real estate out there. I wonder what percentage of these holdings are currently occupied for free and whether ACORN (or whatever they’re calling themselves now) is involved in it.

[sickoflibs]

RE :"The FDIC opposed the move, but there is nothing the FDIC can do, except file a petition for a writ of mandamus in court, against the Federal Reserve, seeking a declaration that the approval was illegal. But, the FDIC would lose, because Congress has given the Federal Reserve Board ultimate power to do whatever it wishes. So, the bottom line is this: When something bad happens, and the derivative obligations are triggered, the FDIC will be on the hook, thanks to the Federal Reserve. The counter-parties of Bank of America, both inside America and elsewhere around the world, will be safely bailed out by the full faith and credit of the USA. Meanwhile, the taxpayers and dollar denominated savers will be fleeced again. "

????

[Jack Hydrazine]

Let’s see...

We have a national total including future unfunded liabilities of about $130 trillion dollars. Throw in $75 trillion in derivatives and we are over $200 trillion.

Nice!!!!

[PGR88]

This latest example of misconduct illustrates the error of allowing a bank-controlled entity, like the Federal Reserve, complete power over the nation's monetary system.

The FED was the cornerstone of Progressive plans for Gov't. The FED must be neutered.

[EternalVigilance]

A key excerpt:

The FDIC opposed the move, but there is nothing the FDIC can do, except file a petition for a writ of mandamus in court, against the Federal Reserve, seeking a declaration that the approval was illegal. But, the FDIC would lose, because Congress has given the Federal Reserve Board ultimate power to do whatever it wishes.

So, the bottom line is this: When something bad happens, and the derivative obligations are triggered, the FDIC will be on the hook, thanks to the Federal Reserve. The counter-parties of Bank of America, both inside America and elsewhere around the world, will be safely bailed out by the full faith and credit of the USA. Meanwhile, the taxpayers and dollar denominated savers will be fleeced again. This latest example of misconduct illustrates the error of allowing a bank-controlled entity, like the Federal Reserve, complete power over the nation's monetary system. The so-called "reforms" enacted by Congress, in the wake of the 2008 crash, have vested more, and not less, power in the Federal Reserve, and supplied us with more, rather than less instability and problems.

This is not an isolated instance. JP Morgan Chase (JPM) is being allowed to house its unstable derivative obligations within its FDIC insured retail banking unit. Other big banks do the same. So long as the Federal Reserve exists and/or other financial regulatory agencies continue to be run by a revolving door staff that moves in and out of industry and government, crony capitalism will be alive and well in America. No amount of Dodd-Frank or Volcker rule legislation will ever protect savers, taxpayers or the American people. Profits will continue to be privatized and losses socialized.

 

[broken_arrow1]

What’s a few Trillion more that we can’t pay back?

[Logical me]

Don't really know what this means but sounds like BofA is about to go belly up or at least another bailout. Both sounds like we are taking another hit.

[Elendur]

it’s still very bad for us.

...just like Ireland.
the Irish people,
were about the MOST debt-free,
in all of Europe.

then the politicians changed the law,
to make the taxpayers liable for the bank’s
derivitive screw-ups.

...the rest is history.

now, the same is happening to us.

[b4its2late]

With Bernyankme’s approval....

[bitterohiogunclinger]

“If the government is stupid enough to do it, I don’t blame the banks for taking advantage of it.”

That is the point of the whole article. The players “behind the scenes” i.e. the executives that are getting the 20 million dollar bonuses move in and out of government writing the rules, and Congress has been bought and paid for.

I’d love to have a sweet deal where if I make money I keep the profits but if I lose money the taxpayers pay for it.

The OWS idiots are correct about one thing, there is much rotten on Wall Street, but the stench originates from the Potomac, not the Hudson.

[PhilosopherStone1000]

To know whether it’s “a lot” we’d have to know what the net is.

E.g., if I bet $4.99 that the 49ers will win and then, to hedge that, bet $5.01 that the 49ers will lose, the “total” bet is $10, but the “net” (potential loss) is $.02. This is what derivatives are “supposed” to do (hedge other bets). Unfortunately, many derivatives aren’t structured in this “win-lose” fashion, but can end up “lose-lose”.

Of course the main point of the article that connected bankers use corrupt politicians to cover their behinds is still valid.

[drypowder]

Would this be considered more LOOTING of the American people? $75 Trillion!!!!