I'm a little late, but Matt Taibbi wrote a terrific piece
advocating pulling your money out of Bank of America. As an OWS-related strategy, this could do much more good than camping out in a park, because
...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.
Taibbi's link goes to Zero Hedge, which brings in a truly astounding number:
Bank of America, which today reported a big bottom line loss net of one-time beneficial items, did something quite tricky and extremely devious last month: it shifted anywhere up to the total of $53 trillion of the total derivatives it held as of June 30 (as Zero Hedge previously reported) on its books at Q2 from the Holding Company, which was downgraded last by Moody's from A2 to Baa1 (the third-lowest investment grade rating) to its retail bank, which was downgraded to the far more palatable A2 (from Aa3). The reason for the transfer? Bank customers who were uneasy with the fact that suddenly the collateral backstoping the operating entity handling their counterparty risk was downgraded to just above junk, demanded that said counterparty risk be mitigated by the bank's $1 trillon in deposits. In other words, as Bloomberg first reported when it broke this story, anywhere up to the full $53 trillion (we don't know for sure how much so we assume the worst case) is now fully and effectively backstopped explicitly by the bank's $1,041 trillion (as of September 30) deposits. Pardon, we meant the people's deposits: the same deposits which caused the bank's website to be inoperative for several days in a row after it was rumored that there was an electronic run on the bank.
Your eyes may have watered reading some of that, but you probably got the gist: B of A is dying. In a sense, it died some time ago; it walks among us because it is undead. If B of A goes, the rest of the Wall Street vampires might also face stakes and crosses.
As I've said before: We need to stop visualizing the economy in terms of capitalism and socialism. We need to think of it in terms of finance capitalism versus industrial capitalism. Over the course of thirty years, the financiers have run the show -- and look what they did to the nation. I am of the opinion that the only thing which can revive industrial capitalism in this country is the socialization of finance capitalism.
The destruction of B of A is just the sort of shock that could bring true reform to the system. Even Obama, wretch that he is, might understand the need for bold action. OWS (if it can maintain its current popularity) could provide political cover, or an impetus, for such a move.
Besides, it's not as though the Wall Streeters have been giving the president much love lately.
we socialize Bank of America outright? Taxpayers have already taken on the risk. Taibbi:
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.
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
I would advise the OWSers to carry signs telling the populace to pull out of B of A and deposit their money in a smaller bank. That's a start.
By the way: That coronary-inducing figure of $53 trillion demonstrates the true absurdity of Wall Street's position. Nobody's quite sure how much money there is in all the world, but every estimate I've seen puts the figure below $53 trillion. In an earlier post
, I cited a source -- the CIA
, actually -- which gave a figure of $44 trillion in the year 2000.
That figures should give the lie to those right-wingers who still insist that the crisis was caused by Fanni and Freddie giving loans to unqualified people of color. If you were to buy all of the houses purchased via subprime loans, you'd spend only a tiny fraction of $53 trillion. Those loans were used as the basis for funky financial instruments which were used as chips in the most surreal casino of all time.