One way you can tell that a bank is in trouble is that it suddenly starts buying full-page ads in newspapers across the country to tell us what great shape its in and what a fine job it’s doing for our communities.
Such a PR push is now being made by Bank of America, which – despite its happy-face ads – is in a heap of hurt. How big of a heap? So big that it’s trying to share the hurt with you and me.
Enjoying Hightower's work? Join us over at our new home on Substack:
In the recent Wall Street collapse, B of A took advantage of the crisis to bulk up its empire. Using $45 billion in bailout money from us taxpayers, the giant gobbled up two troubled financial powers, investment house Merrill Lynch and mortgage hustler Countrywide Financial. It is now choking on these mergers, as well as its own executive incompetence. Its credit rating has been downgraded, its stock price has plummeted, its CEO is desperately trying to raise cash (and save his job) by firing 36,000 employees, and it has infuriated its own customers by trying to impose a $5 monthly fee on debit card users.
Now, though, CEO Brian Moynihan has a dandy plan to lighten his load by dumping a big chunk of it on us taxpayers. He’s trying to transfer a mess of bad investments now held by the Merrill Lynch subsidiary into B of A’s consumer banking unit. Why? Because that unit has about a trillion dollars in customer deposits that are insured by Uncle Sam. So, if Merrill’s sorry investments cause the banking unit to fail, the feds would be there to rescue it.
A banking expert has commented that, “There is always an enormous temptation to dump the losers on the insured institution. We should have fairly tight restrictions on that.”
“Fairly tight?” Uh-uh! We should have totally tight restrictions – as in, “No, you can’t do that.” Why should we let these failed capitalists turn into corporate socialists every time they get in trouble?
“We’re working to help keep the Texas economy moving forward.” B of A ad, Austin American Statesman, October 2, 2011.
“Banks Brace For Fallout On Earnings,” The New York Times, October 10, 2011.
“Banks to Make Customers Pay Debit Card Fee,” The New York Times, September 30, 2011.
“Smart money on Wall Street is split on Bank of America: Soros sells as Berkowitz buys,” www.yahoo.com, October 3, 2011.
“Investing In Banks: Why John Paulson is Selling His Bank Stocks,” www.wallstcheatsheet.com, June 6, 2011.
“Is Bank of America Headed for the Glue Factory?” www.counterpunch.org, October 21, 2011.
Special rate for original Lowdown readers