PRESS RELEASE
Jan. 25, 2012
Public Citizen to Financial Regulators: Bank of America Poses a Grave Threat to U.S. Financial Stability, Should Be Broken Up
Petition Calls on the Federal Reserve and Financial Stability Oversight Council to Reform Banking Behemoth, Create Smaller, Simpler and Safer Institutions to Guard Against Financial Crisis
WASHINGTON, D.C. – Bank of America, the second-largest bank holding company in the U.S., should be broken up and reformed, Public Citizen said in a petition sent today to the Federal Reserve and the Financial Stability Oversight Council.
Public Citizen also sent a separate letter to financial regulators co-signed by 19 individuals, including economists and legal scholars, and by Americans for Financial Reform, Center for Media and Democracy, Demos, National People’s Action, Neighborhood Economic Development Advocacy Project, New Bottom Line, SAFER and U.S. Public Interest Research Group. The letter calls on regulators to investigate any threats posed by Bank of America or other large and complex financial institutions commonly known as “too big to fail” and to take all actions necessary to safeguard financial stability.
Public Citizen’s petition calls on regulators to use authority granted by section 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to reform Bank of America into a set of smaller, simpler and safer institutions.
Bank of America, which holds assets equal to roughly one-seventh of the country’s gross domestic product, is too large and complex to manage or regulate properly, the petition said. Moreover, its financial condition is poor and could deteriorate rapidly.
Near- and long-term financial indicators demonstrate the market’s unease with Bank of America and show that the bank is becoming increasingly unstable. In addition, Bank of America likely is undercapitalized, as it faces potential liabilities and market risks that could severely destabilize it.These liabilities could arise from the bank’s ongoing litigation and from exposure to financial instability in Europe.
An ongoing study by the Volatility Institute at New York University’s Stern School of Business confirms the danger posed by the bank: When looking at financial institutions’ contributions to systemic risk, Bank of America ranks first among U.S. financial institutions. The analysis shows not only that Bank of America is highly susceptible to financial crises, but also that it could “create or extend” a crisis.
“The bank poses a ‘grave threat’ to U.S. financial stability by any reasonable definition of the phrase,” said David Arkush, director of Public Citizen’s Congress Watch division. “If Bank of America in its current form were to fail, it would devastate the financial system. We’re asking the regulators to make sure that never happens. The only way to be sure is to reform the institution into something safer before any crisis materializes.”
The Federal Reserve and the Financial Stability Oversight Council should use section 121 of the Dodd-Frank Act – which gives the Fed the ability to mitigate the “grave threat” that a financial institution poses by limiting banks’ activities or forcing it to divest assets – to break Bank of America into separate institutions. If crafted properly, these smaller institutions would be less likely to fail, would not endanger the U.S. financial system in the event of failure and would be easier to liquidate in an orderly fashion should it become necessary, the petition said.
“The time to use section 121 is well in advance of a crisis,” said Micah Hauptman, Public Citizen’s financial campaign coordinator. “In the case of Bank of America, that means now.”
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Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org.
Copy of petition and letter below…
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4closureFraud.org
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Public Citizen letter to financial regulators
The 99% ask for the symbolic obliteration of the American corporation know as BOA. Current employees will be hired by a publically funded non-profit dedicated to housing any and all Americans and assisting in the investigation and prosecution of financial predators.
Amen to all the previous comments. BOA is terrible to deal with on short sales, modifications, new loans and look at how many homes they have foreclosed on by mistake. They lack the expertise to deal with the real estate situation. Anyone that was stupid enough to purchase Country Wide is not the brightest bulb in the package.
My sister had a mobile home on her loan financed thru Countrywide, in Shawnee,Oklahoma. They go out to look at the property. They go down the street to another property owned free and clear by someone else. They
take a bulldozer to the property and the barn. The owner had his winter hay stored in the barn only to find out it is the wrong house. Address is different, legal is different owner is different just how ignorant can a company be???????? BOA needs to be put out of its misery.
wish we knew ALL about the other major bankster crooks and if they actually listen to this very important issue we could then just go down the list and clean up this monstrous piles of crapoLIE…time will tell and this paper is quite impressive I must say!! Ya know even BB sated the banks had broken the law so go figure what the thieves have in their psychopathy mind beyond this. We the people are so sick of this stink …past time to retaliate past time for justice yes the people demand their life back NOW! and for EVER Plain old common law
Day late ,dollar short ,the crisis has already hit and BOA is just one of many.They have already succeeded in ruining the banking and housing industries.Now we have to make sure it doesn’t happen again.Well it will anyway if it’s not BOA it will be someone else and the crises will continue.We are already in crisis that has to be faced!Talking about it will help but not change it.We need to take our country back now and not waste any more time or resource on the banks.Let them fold it is the only way to resolve this issue.
Yes..the 98% demand accountability for $1.2 quadrillion in derivatives fraud ……$700 trillion in mortgage derivatives fraud that was committed by Wall Street and the Banksters!…We The People demand our stolen wealth, homes, livelihoods and businesses are returned to us..!!! We refuse to pay for their unsustainable collateral debt fraud..!