A little light reading for Bank Transfer Day

Are you taking action on Bank Transfer Day? Drop your thoughts in the comments! - promoted by david

Matt Taibbi writes about Bank of America:

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.

The FDIC wasn’t pleased by the move, but the Fed apparently encouraged it. Bloomberg, citing people with “direct knowledge” of the deals, reported that,

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.

So the primary regulator of the banking industry is encouraging a functionally insolvent megabank to respond to a credit downgrade by pushing its most explosively risky holdings onto the laps of the taxpayer. This is lunacy…. Remember that story about the Chinese man who had a world-record 33-pound tumor removed from his face? This would be like treating that patient by removing the tumor and surgically attaching it to the face of a new patient, in this case the U.S. taxpayer.

Too big to fail. Our megacorporate citizens go first-class all the way. The rest of us are second-class citizens at best.


14 Comments . Leave a comment below.
  1. That is unbelievable.

    This is another reason why the Federal Reserve has got to go. It’s an unelected body with zero transparency that rules over this country in all the important ways — the purse strings. That it would allow this to happen is unimaginable and evidence that it could give a crap about the people of this country and ONLY cares about the big banks.

    Ben Bernanke ought to be locked up and tried for crimes against humanity, as far as I’m concerned.

    RyansTake   @   Sat 5 Nov 3:09 PM
    • "Ben Bernanke ought to be locked up and tried for crimes against humanity, as far as I’m concerned."

      You and Rick Perry. ;)

      • Oh LOL

        Touche, David!

      • A stopped clock is right twice a day

        Ben Bernanke and the Federal Reserve, as currently constituted and directed, is simply an unaccountable menace to society.

        TRILLIONS went to the banks from the federal reserve to bail them out from the fed — trillions that were never sanctioned by representation you or I ever voted for. It took years for us to find out about it, and years more to find out just how much.

        Even to this day, there’s no accountability. We don’t get the minutes to federal reserve meetings until months, if not years, after the fact, and even then it’s not the transcripts of the meetings or anything approaching a real and honest description of what went down at them. The sad thing is even getting that took years of hard work and effort to get through legislation.

        I’m exaggerating a little bit about locking him up (unless he committed real crimes, which is entirely possible), but he has got to go and we’ve got to come up with an entirely different system and format for our central banking, one that prioritizes employment and jobs for regular people over making the 1% even richer than they are today, at the cost of everyone else.

        RyansTake   @   Sun 6 Nov 4:30 AM
  2. I think I'm good.

    My money is at Eastern Bank, which I understand to have a pretty good reputation. I also have a little in National Institutes of Health Federal Credit Union.

    • I thought I was good, too

      I had an account at BayBank. Then it was bought by Bank of Boston. I was OK with that, too. then Bob was bought by Fleet Bank, but my branch was sold to US Trust, because of some vestigial regulatory impulse on the part of the government. I actually liked US Trust; in spite of their name. Then they were bought by Bank of America, and I ducked into a credit union. (I have the feeling I’ve forgotten a couple of acquisitions in there. There were a lot of them.)

      I am happy with the CU. No big bank can swoop down and buy them. They refund any fees I might incur by using an ATM, even one of BOA’s.

      A couple of months back, I had to cash out a US Savings Bond. The CU said they couldn’t do it; I had to either go to a commercial bank or hike in to the Fed in Boston. The commercial banks wouldn’t do it unless I opened an account. So I opened one at Citizens because there’s branch near where I work.

      A few minutes ago, I got a phone call from someone calling for Citizens. He wanted me to try out an insurance package, for which I would get a gas voucher. My CU has never called me, and I believe never would call me for BS like that. Maybe I should try the Lowell Five, and hope none of the megabanks starts lusting after it.

      • That happened to me

        in NH with Citizens taking over and suddenly I was getting fees like crazy, for being under a certain balance, because previously I’d had a student account (and still was a student) and I failed to read some tiny small print they must have sent me about changing the terms of my account. I was so pissed. I immediately changed banks (to Bank of NH, which then got bought out too, by TD…sigh).

        Lowell Five is good, as is Washington Savings Bank (also local). I am at MA/COM FCU (no longer tied to MA/COM, it’s residency or working in the city of Lowell to join now), and Joan D’Arc FCU is really good too.

        In our area we’re blessed with a lot of local choices.

      • Eastern Bank has a weird style of ownership

        that makes it very difficult for it to be bought out. It’s not a credit union, but it would be near impossible for a big bank to swoop in and buy them out. Honestly, I’d be far more worried that they’re going to continue swooping in and buying others out. It won’t be too long until they’re as big as some of the other big regionals (baybank, shawmut, etc.) that gobbled each other up before the biggest fish came to town and labelled all the signs Bank of America…

        All that said, if I had my money in Eastern Bank, I wouldn’t feel the need to pull it out as part of the Bank Transfer movement.

        RyansTake   @   Sun 6 Nov 4:52 AM
        • Middlesex

          Middlesex Savings Bank has a similar form of mutual ownership and, likewise, I feel no need to drop them. I view the Bank Transfer movement as moving away from the big banks and/or banks with unreasonable fees. Credit unions are one option, but local mutual banks are another fine alternative.

        • Eastern Bank acquired my old bank (Wainwright)

          I left BoA for Wainwright somewhere around 2005/2006. Wainwright was far and away the best bank I’ve ever patronized, my wife and I were really unhappy when it was acquired by Eastern Bank.

          All in all, since that acquisition, I’ve seen some things I’m not happy about, but Eastern Bank is still better than BoA.

          Eastern Bank was far less helpful than Wainwright was in resolving a debit card dispute. Opening a joint checking account with my 17 year old son was a much bigger hassle with Eastern Bank than it used to be with Wainwright.

          Still, my overall customer experience with Eastern Bank (nearly a year now) has been way way better than it was with BoA.

    • Call it what you will

      From that New Republic article:

      But in that way, the Bank Transfer Day enthusiasts are only doing Bank of America, and other big banks like it, a favor. By interpreting the new charges as another example of greedy perfidy, rather than as a way to boost profits by driving unprofitable customers away, the organizers are doing the big banks’ bidding.

      You say potayto, I say potahto. How is boosting profits by driving small customers away really different from greedy perfidy?

  3. Steve Grossman

    began his Move Money program with the Commonwealth’s deposits shortly after taking office.

    To help the banks, Grossman is committed to allocating at least $100 million for deposit into participating banks as part of the first phase of the program. Banks participating in the program will be eligible for deposits up to $5 million.

    Grossman said southeastern Massachusetts will be represented in the program with banks such as Citizens Union, Rockland Trust and Mechanics Corporation among the 60 to 70 banks that will ultimately participate. Grossman said 24 banks have agreed to join in.

    “Let’s take Massachusetts taxpayers money, put it in Massachusetts banks and loan it to Massachusetts businesses,” Grossman said.

    Bolstering the state’s small businesses, Grossman said, should have a ripple effect on the local economy, especially considering the impact those businesses already have within the state.

    Based on state data contained in a summary of the “Move Money” proposal, small businesses and sole proprietors make up 85 percent of the state’s businesses. Those businesses have, in turn, historically accounted for two-thirds of the new jobs created in the state.

    “Anything we can do as a commonwealth to help small businesses grow, develop, flourish, is the centerpiece of what we should be doing,” Grossman said.

    Read more:

    This program rewards community banks that are invested in their communities and customers success. It assists small business, and creates real jobs. Wow! How much is this going to cost us? It may actually save taxpayer money.

    Steve Grossman, innovator, genius – my hero!!

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