A protest group is urging President Obama to revoke permission to Bank of America that allows it to transfer risky assets to its federally insured unit.
A group organizing protests distinct from, but similar in spirit to, Occupy Wall Street is denouncing permission granted by the Obama administration to allow Bank of America’s holding company to transfer risky derivative assets from Merrill Lynch to its federally insured bank.
The New Bottom Line — a coalition of small business, community and faith organizations — wrote President Obama, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and Federal Deposit Insurance Corp. Acting Chairman Martin Gruenberg — to demand that permission for the deal be revoked.
Bank of America, which acquired Merrill Lynch in the wake of the 2008 financial meltdown, itself received a $45 billion taxpayer-funded bailout. The bank, which holds more than $1 trillion in deposits, is the second-largest in that regard.
The decision by federal regulators once again allows a troubled financial institution to transfer risk onto American taxpayers, according to the New Bottom Line, which targeted Bank of America last month in a Boston protest. Bank of America last month was hit with a downgrade of its credit.
The risk is that taxpayers will be left holding the bag if the transferred assets become worthless, the organization contends. The New Bottom Line called the move “a back-door bail-out” of Bank of America.
The New Bottom Line also notes that Bank of America has foreclosed on hundreds of thousands of homes of struggling U.S. homeowners.
Any federal assistance to Bank of America must be contingent on a “clear set of strict requirements aimed at helping the American people and the economy,” the organization says in its letter to the president.
Among other conditions, the New Bottom Line tells Obama that Bank of America must stop financing pay day and other predatory loan products.
Scott Nance is the editor and publisher of the news site The Washington Current. He has covered Congress and the federal government for more than a decade.
