As the Occupy Wall Street protesters in New York, along with many others around the country, continue to rail against largess in the banking industry, the news that Bank of America posted $6.2 billion in profit during the third quarter is certainly not going to sit well.
Third Quarter Results
According to this CNN Money article, Charlotte, N.C. based Bank of America reported net income of 56 cents a share, which works out to just about $6.2 billion. The gains came from adjustments in structured liabilities, the sale of a large stake in China Construction Bank Corp., and changes in the value of the company’s debt.
For a company derided for introducing an immensely unpopular new fee in a bid to just “make a profit,” this news sounds slightly more damming than it actually is. Since most of the money came from the sale of a business and financial restructuring, it’s difficult to claim that this type of profit will continue in the coming quarters. However, Bank of America continues to engage in risky banking practices, and posting a huge quarter while claiming that massive new fees and numerous layoffs are required to stay in business isn’t going to sit well with anyone.
Bank of America Derivatives
Financial derivatives, which are simply a way for large institutions to gamble in a rigged system and are often called “financial weapons of mass destruction,” continue to be a point of contention for anyone taking issue with how Bank of America does business. According to this Bloomberg Businessweek article, BofA has moved these dangerous assets from its Merrill Lynch unit to a different area of the company.
While this may seem innocuous, the problem is that the area where they moved the derivatives is full of FDIC-insured deposits, which means that if the derivatives bring down the unit, the government will be on the hook for the depositors money.
Frankly, neither the news of the third-quarter profits or the financial shenanigans are surprising, given the current state of the U.S. banking system. The bankers have had regulators in their pocket for decades now, and even after they almost brought the entire country down, the Bank of Americas have gone back to doing the exact same things. Why would anyone think that this time, things will be different?
Looking at the situation through this prism, it’s easy to see why people are angry enough to decide to occupy Wall Street.