How Occupy Wall Street Plans to Take Down Bank of America--And How You Can Help

From alternet.org 
While there's almost nothing B of A does that is for the people, it sure as hell is paid for by the people. Now activists are pushing to break it up before it breaks down--again.

by Sarah Jaffe 4-8-12

Bank of America: the very name is meant to conjure up comforting, red-white-and-blue fantasies of a bank of the people, by the people, and for the people.

almost nothing the megabank does that is for the people, it sure as hell is paid for bythe people. It got $45 billion just in bailout money, and trillions (with a T) in emergency loans from the Federal Reserve—and not only did it not pay taxes last year, it received a tax refund of $1 billion. And yet it's still teetering on the edge of collapse.

But as Matt Taibbi pointed out in his latest feature for Rolling Stone, while there's 

Unless we do something soon, we might be heading for yet another people's bailout of America's bank.

Occupy Wall Street has decided to fight back. “This bank is not working, and the people should be deciding how to break up this bank, how it should be democratically run, before it gets either another bailout or is bought out by some other bank,” Nelini Stamp, an Occupy Wall Street participant and organizer, told AlterNet.

Big Bad BAC

Bank of America just can't seem to stay ahead of its public relations disasters. Just last week, the news hit that the bank paid its CEO, Brian Moynihan, $7.5 million last year—a year in which the company's stock dropped 58 percent and when it lost claim to its place as the nation's biggest bank (to JP Morgan Chase). That was a sixfold pay increase, in case you were wondering, from the year before. So: your company's stock price plummets, you get sued left, right and center, and you get a giant raise?

But outrage over its CEO's pay is the least of the zombie bank's concerns. More pressing is an impending downgrade (another one) of its credit rating. Right now, Moody's rates B of A as Baa1—but this May, along with other financial giants, it might drop that rating to Baa2—just two steps above junk.

What does that actually mean? Well, according to Susanne Craig and Peter Eavis at the New York Times, “The three banks that stand to be the most affected by a ratings downgrade have already said that they would have to put up billions of dollars more in collateral to back trading contracts.”

Then, of course, there's the constant lawsuits, settlements, and battles with various state and federal government officials. Yves Smith reported this weekthat four pension funds may have stuck a wrench into the process of the $8.5 billion settlement over bad mortgages from Bank of America's Countrywide mortgage subsidiary. A U.S. District Judge in Manhattan ruled that the suit against Bank of New York Mellon, in the case, could proceed, and Smith noted, “If other parties follow the lead of these four pension funds against Countrywide trusts, you could see enough holes shot in the settlement deal so as to render it useless to Bank of America (indeed, worse than useless: the deal provides for expanded indemnification for Bank of New York Mellon, so if angry investors saddle up to sue BoNY and BofA, it might find itself worse off, depending on the nature and level of damages awarded against BoNY).”

That's just one settlement among many—as Taibbi wrote, last year, the bank settled for $335 million with the Justice Department after it pushed black and Latino borrowers, perfectly qualified for normal mortgages, into much riskier subprime loans. And it paid a $137 million fine for conspiring with other banks to rig the process by which cities and towns choose banks to manage their money. Taibbi explained, “in an attempt to avoid prosecution, it applied to the Justice Department's corporate leniency program, essentially confessing its criminal status: As plaintiff attorneys noted, the application 'means that Bank of America is an admitted felon.'”

Taibbi continued:

“In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court orders to stop its illegal robo-signing, and exploited President Obama's signature mortgage-relief program. The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to try to game the game itself – by fixing global interest rates!”

Yet, after all this, the bank is still chugging along, hiking up fees on customers who can't afford them, and sending collections agencies after people who don't even have debt anymore. And it remains supremely confident that no matter how many lawsuits or downgrades, it will always have access to the next government bailout.

There's no greater proof of this than the fact that not long ago, Bank of America was allowed, with the blessing of the Fed, to move a huge chunk of potentially toxic derivatives from its shaky investment banking arm, Merrill Lynch, to the publicly-insured Bank of America itself—guaranteeing an FDIC bailout if the debt goes bad.

“This, in essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives,” Taibbi wrote.

Break It Up

Back in January, Public Citizen put forth a petition calling for Bank of America to be broken up by regulators, who have the authority to do so under Section 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A group of economists and activist groups signed on to a separate letter to the Treasury Secretary, the Fed and the FDIC, calling for investigation into the country's biggest banks to see if more of them were deserving of dissolution.

And now, Occupy Wall Street has set its sights on B of A.

“Our specific demand is to break up Bank of America because we're done with this too big to fail thing. Bank of America is too big, it has been failing and we want to highlight exactly how it's failing,” Nelini Stamp told AlterNet.

To target the big bank, OWS has a variety of tactics ranging from direct actions to coordinated Move your Money efforts, and as their spring offensive continues, they're ratcheting up the pressure on B of A.

Of Move your Money, Stamp said, “We want to make sure that people feel like that is a direct action unto itself. It's not just 'I'm just moving my money from here,' but actually people are feeling empowered and knowledgeable about the choices that they're making when they're making their banking decisions.”

On April 13 in New York, Occupy will be holding a “move your money relay,” escorting people from Bank of America branches, where they'll close their accounts, to community banks and local credit unions, where they'll hold celebrations to welcome people to their money's new home. And May 9^th is Bank of America's annual shareholder meeting in Charlotte, North Carolina (the same city where just a few months later, Democrats will converge to re-nominate Barack Obama for a second presidential term – at Bank of America stadium). Other activist groups like the Rainforest Action Network and the New Bottom Line are joining Occupiers in calling for actions in Charlotte to protest the bank's policies.

“As the top financier of America’s dirty, outdated coal industry, which pollutes American communities every day, Bank of America has become emblematic of everything the 99% struggles to change,” Amanda Starbuck of Rainforest Action Network said.

It can be easy to get lost in the mess of evils that Bank of America is responsible for, but the OWS crew wants to make sure that focus stays on the bank's responsibility, both itself and through its Countrywide mortgage subsidiary, for thousands upon thousands of foreclosures. (The bank controls 17 percent of all of America's home mortgages, according to Taibbi.)

In New York, Organizing for Occupation has been doing blockades at foreclosure auctions, Stamp said, disrupting the process of selling off homes. The week of April 16, there will be more auctions in the city, and Occupy activists plan to target homes specifically being foreclosed upon by Bank of America and Countrywide, calling attention to the fact that foreclosures are more than numbers on a balance sheet—that each one represents a person, a family, being put out on the street. “We want to highlight that banks steal homes,” Stamp said.

If you can't make it to a foreclosure blockade and you've already moved your money away from Bank of America (or never banked there in the first place), the Occupy crew is inviting other activists to take a page from their book and move into a local Bank of America branch—and then share your experience online. In what they call “living-rooming,” a crew from Occupy's Direct Action group brought furniture into a local Bank of America branch and settled in to hang out, telling the bank employees that they were renting the place out—for the $230 billion in bailouts the bank had gotten from them and people like them. “It's your home too!” they announced.

While moving into a Bank of America lobby isn't a permanent solution for thousands of people left homeless by predatory banking, it is a fun way to remind the banks—and the general public—that Bank of America is, in fact, our bank—that it's us who've paid for it, and that if it tanks again, we're going to be the ones on the hook for bailing it out. To prevent that from happening, Occupy and an ever-growing number of organizations and experts are calling, ever louder, to break up the big bank before it breaks the economy—again. 

Sarah Jaffe is an associate editor at AlterNet, a rabblerouser and frequent Twitterer. You can follow her at @seasonothebitch.

(http://eye-on-washington.blogspot.com)

Why Is Obama NOT Listening?

Bank of America is about to transfer trillions of toxic derivative dollars onto the Fed. Hasn't this White House learned anything after the AIG rip-off? Have we not had enough of credit default swaps being covered by the taxpayers creating a national security risk.

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit

By Bob Ivry, Hugh Son and Christine Harper - Oct 18, 2011

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, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. 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.”

Accommodating Clients

Jerry Dubrowski, a spokesman for Charlotte, North Carolina- based Bank of America, declined to comment on the transfers or the firm’s discussions with regulators. The company “continues to accommodate the needs of our clients through each of our multiple trading entities, including Bank of America NA,” he said in an e-mailed statement, referring to the company’s deposit-taking unit.

Barbara Hagenbaugh, a Fed spokeswoman, said she couldn’t discuss supervision of specific institutions. Greg Hernandez, an FDIC spokesman, declined to comment.

Bank of America posted a $6.2 billion third-quarter profit today, compared with a loss of $7.3 billion a year earlier, as credit quality improved and the firm booked one-time accounting gains. The lender rose 7.3 percent to $6.47 at 1:54 p.m. in New York trading, making it the day’s best performer in the Dow Jones Industrial Average. Credit-default swaps on Bank of America eased 10 basis points to a mid-price of 380 as of 11:49 a.m. in New York, according to broker Phoenix Partners Group.

Moody’s Investors Service downgraded Bank of America’s long-term credit ratings Sept. 21, cutting both the holding company and the retail bank two notches apiece. The holding company fell to Baa1, the third-lowest investment-grade rank, from A2, while the retail bank declined to A2 from Aa3.

Moody’s Downgrade

The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter.

Bank of America estimated in an August regulatory filing that a two-level downgrade by all ratings companies would have required that it post $3.3 billion in additional collateral and termination payments, based on over-the-counter derivatives and other trading agreements as of June 30. The figure doesn’t include possible collateral payments due to “variable interest entities,” which the firm is evaluating, it said in the filing.

Dubrowski declined to comment on collateral or termination payments after the downgrade.

‘Be Prepared’

Bank of America’s rating is now four grades below the one Moody’s assigned to JPMorgan Chase & Co. (JPM), the biggest U.S. bank by deposits at midyear, and a level below the rating given to Citigroup Inc. (C), the third-biggest. Bank of America is the only U.S. lender that lacks a rating of A3 or higher among the five firms listed by the Office of the Comptroller of the Currency as having the biggest derivatives books.

“We had worked very hard over the course of the last nine months to be prepared to the extent that we did receive a downgrade, and feel very good about the way that we’ve minimized the potential impact” Bank of America Chief Financial Officer Bruce Thompson said in a conference call today with analysts. “Since the downgrade, we have not seen any change in our global excess liquidity sources.”

Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates.

Dodd-Frank Rules

Keeping such deals separate from FDIC-insured savings has been a cornerstone of U.S. regulation for decades, including last year’s Dodd-Frank overhaul of Wall Street regulation.

The legislation gave the FDIC, which liquidates failing banks, expanded powers to dismantle large financial institutions in danger of failing. The agency can borrow from the Treasury Department to finance the biggest lenders’ operations to stem bank runs. It’s required to recoup taxpayer money used during the resolution process through fees on the largest firms.

Bank of America benefited from two injections of U.S. bailout funds during the financial crisis. The first, in 2008, included $15 billion for the bank and $10 billion for Merrill, which the bank had agreed to buy. The second round of $20 billion came in January 2009 after Merrill’s losses in its final quarter as an independent firm surpassed $15 billion, raising doubts about the bank’s stability if the takeover proceeded. The U.S. also offered to guarantee $118 billion of assets held by the combined company, mostly at Merrill. The company repaid federal bailout funds in 2009 with interest.

‘The Normal Course’

Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.

The moves by Bank of America are part of “the normal course of dealings that we’ve had with counterparties since Merrill Lynch and BofA came together,” Thompson said today.

‘Created a Firewall’

Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law.

“Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said. The discount window has been open to banks as the lender of last resort since 1914.

As a general rule, as long as transactions involve high- quality assets and don’t exceed certain quantitative limitations, they should be allowed under the Federal Reserve Act, Omarova said.

In 2009, the Fed granted Section 23A exemptions to the banking arms of Ally Financial Inc., HSBC Holdings Plc, Fifth Third Bancorp, ING Groep NV, General Electric Co., Northern Trust Corp., CIT Group Inc., Morgan Stanley and Goldman Sachs Group Inc., among others, according to letters posted on the Fed’s website.

The central bank terminated exemptions last year for retail-banking units of JPMorgan, Citigroup, Barclays Plc, Royal Bank of Scotland Plc and Deutsche Bank AG. The Fed also ended an exemption for Bank of America in March 2010 and in September of that year approved a new one.

Section 23A “is among the most important tools that U.S. bank regulators have to protect the safety and soundness of U.S. banks,” Scott Alvarez, the Fed’s general counsel, told Congress in March 2008.

To contact the reporters on this story: Bob Ivry in New York at bivry@bloomberg.net; Hugh Son in New York at hson1@bloomberg.net; Christine Harper in New York atcharper@bloomberg.net.

To contact the editors responsible for this story: Gary Putka at gputka@bloomberg.net; David Scheer at dscheer@bloomberg.net.

Max Keiser speaks about the situation the banks are in.

"This week Max Keiser and co-host, Stacy Herbert, talk about the European penny drops as more banks need more bailouts while the public debt clock ticks up to $40 trillion. In the second half of the show, Max Keiser interviews Michael Betancourt about the threat that Occupy Wall Street presents to our modern form of capitalism that relies on ignorance and passivity in the population in order to operate schemes of fraud and bubbles."

President Obama Has Been Swarmed By The Huge Financial Beehives

I heard a story from a gas company technician about a massive hive of bees that swarmed him. He was standing still when he saw a queen bee leave what he assumed was a meadow hive leading a giant swarm of bees numbering in the thousands. He said it was a huge black cloud of bees that weaved all around as it approached him. The giant swarm came toward him, encircled him, and then, led by the queen, took off into the distance.

This is what has been happening to the average person in the United States. Since Reagan, the financial beehives have been building their worker bee populations in order to go out upon the planet seeking grains of pollen. The pollen consists of the people’s financial wealth.

We have seen a Goldman Sachs beehive, as well as a CITI hive, a BoA hive, and the list goes on. Instead of just a localized, unassuming tree hanging hive, they built fortress hives. The chair queens not only had worker bees, but operative bees that trained the busy little worker drones in the process of finding grains of pollen from the most barren and questionable sources, as well as from the common and plentiful sources.

The worker bees were shown that pollen could be discovered in the open market fields where there could be found a plethora of blooming wealth of flowering capital sources ready for the picking. And, there was nothing to stand in their way.

The worker bees also found usable flowering capital under many rocks and stones, of which they overturned to pluck for the taking.

The chair queens created a syndicate. They would meet together in secret plotting and developing ways to take the pollen grains and brew securitized and “derivativized” nectar formulas to feed all the worker bees motivating them to gather up more and more pollen grains. They were even encouraged to keep a portion of the nectar brew to sell or use for themselves.

The leader of all the land, which had been picked by the leading chair queens, began getting supplied with all the nectar he could get away with. This would ensure the control by the chair queens over the pollen gathering processes. This man was President Obama. The leading and most powerful chair queen was one who ran the Goldman Sachs hive. This chair queen told President Obama that he would be bringing key GS hive operators into his command and control center. The list of key operator bees was numerous. They were instrumental in training operators that swarmed the congress of the land, as well as many other agencies, facilities, and companies.

The goal of all these operators was to make sure that even the pollen stored inside the Treasury of Pollen would end up in the various hives, but mostly in the deep storage module vaults of the GS hive, AIG hive and the CITI hive.

The danger that occurred was that President Obama had placed in charge of the people’s Treasury of Pollen a key GS hive operator. This operator, a high level worker bee, had a fellow pollen-syndicate operator in charge of the Federal Reserve of Pollen Grains. He devised a technique that took a grain of pollen and repeatedly split it into numerous grains diluting the original value of that grain but which still could be made into nectar, although watered down in many respects. Therefore, it no longer had the same potency and “nutritional value” when used requiring more to supply the typical daily requirements of nectar.

The people, who worked hard to plant the seeds, toiled the land using their bodies and minds to cultivate the plants and crops that provided the blossoms and flowers, and ultimately, the seeds that produced the pollen, which the worker bees took at will. There were no rules or regulations set upon the worker bees because if the people’s representatives did not play the game the way the chair queens wanted it played, then they would be attacked by the swarm with repeated stings removing them as an adversary to their greed-based objectives.

After decades of the people laboring over their fields of flowering plants and crops, the worker bees took so much pollen so quickly that the plants could not pollinate each other because the pollen was not being used to propagate the land with new and improved crops and plants, but to steal the pollen to produce nectar inside the hives. In other words, the chair queens and operators wanted all the pollen grains for themselves.

This resulted in fewer crops and plants to find pollen grains. The hives had to lay-off worker bees, and the field hands no longer were able to grow as many crops and plants for the purpose of producing seeds for the following planting season. The overall economy of the land fell into collapse. In the past, the people had lots of fruits, flowers, beans, nuts, seeds, and grains to keep the economy thriving. It thrived too much and the nectar brew began to overheat. The process of splitting the pollen grains to produce the diluted “nectarized” securities and derivative formulas ended up causing a great fire from an unregulated fermentation process destroying all that had been stored and saved.

The frightened chair queens ended up going to the Federal Reserve of Pollen Grains and President Obama’s key chair queen operative inside the Treasury of Pollen demanding they turn over all their stored grains to them, otherwise the hives will self-destruct and disappear leaving only the small beehives hanging throughout the fields, valleys, mountains and villages. The chair queens painted a bleak and grim future if they were not in control of the pollen grains.

The disappearance of the giant hives would have been good in the long run because the local people would have a more sustainable relationship with the bees, the crops and plants. The chair queens were afraid of this occurring removing them from the wealth-gathering process of stealing pollen grains from the people.

The sustainable scenario did not happen. The chair queens won out because President Obama favored them over the needs and survival of the people. What would be needed is for President Obama to authorize his command center to go out and use a potent and effective, as well as long lasting, bug defogger on all the massive hives that had caused the collapse in the first place!

The sequel has yet to be made. Stay tuned.

thanks for reading, jerry