The Bankwatch

Tracking the consumer evolution of financial services

Bank of America looking increasingly vulnerable

Bank of America continues with apparently moves that can only be characterised as desperate.  This one involves some $70 Trillion in derivatives.  Yes that number is correct, with a “T”, and it could (to be confirmed) represent some 10% of all derivatives in the world.  This is astounding.

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

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.

As commented over at Naked Capitalism:

Bank of America Deathwatch: Moves Risky Derivatives from Holding Company to Taxpayer-Backstopped Depository

If you have any doubt that Bank of America is in trouble, this development should settle it. I’m late to this important story broken this morning by Bob Ivry of Bloomberg, but both Bill Black (who I interviewed just now) and I see this as a desperate (or at the very best, remarkably inept) move by Bank of America’s management.

The news about BofA has turned remarkably negative in the last few months.  It began when Warren Buffet chipped in with $5 Bn which was an odd and awkward moment.

BofA did not look good during the crisis, but the shifts they are going through now, including write downs and moving things around amongst subsidiaries, project BAC, none of which is a healthy sign and points to increasing signs of desperation and running out of options for some inevitable end.

Written by Colin Henderson

October 19, 2011 at 22:54

Posted in Uncategorized

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  1. […] and specific to their bank.  Bank of America with its enormous iceberg of bad debts and derivative liability springs to mind.  The difference with Lehmans was they were not trusted and that was why they […]

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