Bank of America is using customer deposits as margin for their derivatives. You would think that should be completely illegal (think MF Global) but it's just another day in the incestuous relationship between a TBTF bank and the government.
BTW, "nobody should make the mistake that BofA is alone in this move: every other bank that has major derivative exposure and has a depository base has certainly been forced to do precisely the same..."
Yes, this move by B of A, Merrill Lynch and other member banks of the Federal Reserve was done to shore up already weak credit ratings because it allowed the derivative exposure to be insured by FDIC. It is seen as a move anticipating bankruptcy.
FDIC howled over such moves and were overruled by Geithner at Treasury and by Bernanke’s Federal Reserve.
It was said when these moves were made that it could lead to the Mother of All Bailouts, 50 to 75 trillion or more.
Such moves do indeed put a gun to the head of the Federal Government and thereby the American People to be ready to pay up.
Hence my tag line.