Bank of America’s plan to shift bad Merrill Lynch derivatives to its retail banks will result in a situation that ties the FDIC’s survival to BofA’s. Hoisting the $55 trillion, yes that is trillion, onto depositors will save the bank millions of dollars in collateral but puts customer’s money in danger of disappearing should BofA crumble. The move is in response to the bank’s credit rating dropping recently.
So among the many shady things Bank of America has done in the past few years with depositors money, now they are putting their customer’s savings at risk, as if illegal foreclosures and new fees were not enough. BofA’s public relations department better get ready for major clean-up. While BofA’s officials don’t feel moving the $55 trillion in bad derivatives should be looked at as bad for the bank, the risk they are taking with customer’s money is going to quickly become a boon to customer retention.
Bank of America’s requested move has also caused bickering between the Federal Deposit Insurance Corporation and the Federal Reserve. The Fed has accused the FDIC of leaking BofA’s business to the media. A private bank is trying to make a move that could mean the end of the FDIC and millions of dollars in customer money should the bank fold. If the FDIC did not speak out, Americans around the country would be infuriated when they lost their money and discovered the FDIC had concerns.