Bank America Analysts. Incompetents, Or Outright Liars? I'm Guessing Both.

   (Commentary posted by Roger Erickson)

"The PBOC is [acting] through selective cuts in the reserve-requirement - the portion of of deposits that banks need to keep in reserve, rather than lending out ... the Bank of America analysts said in a report"

Seriously. They said that with a poker face that was either straight, or just ignorant, or indicative of racketeering.

At what point do we just throw in the turban, give up on this electorate, and try Islamic banking? It can't possibly be as corrupt AND dumb, simultaneously ... can it?*

If we're going to practice kabuki banking, why stop there? Say, here's an idea. How about we just require banks to declare fiat reserves, so that they won't run out of the public fiat that they're tasked with reporting to the Federal Reserve? If they can't run out of our fiat to "loan" out, that would also remove the need to bother with fiat credit ratings, and make Liar's Loans fully fiat as well? Fraudulent form over adaptive function would be complete!

PT Barnum would likely approve. It'd be worth the price of admission just to watch that bill sail through Congress. :( Heck, even Alice in Wonderland would probably approve. Plus, "capitalists" could get the popcorn concession for the comedy show. In capitalist theory, we'd all win by most losing.


* It once seemed like a good idea to have all students learn the fundamentals of finance by age 10, but NOT if BOA & the American Banking Association are allowed to control the indoctrination, er ... "curriculum" - or whatever they call their obsolete, gold-std program. If we followed their lead, the DoD would also return to using flintlock muskets and a sailboat navy, and "policy agility" would disappear from our vocabulary, not just our  reality.

Zero Hedge — BOA on TPC

From Bank of America:

The trillion dollar tooth fairy

From the land of fiscal make-believe

The budget skirmishes over the past few years have spawned a lot of bad ideas. The latest is that the US Treasury issue a trillion dollar coin to get around the debt ceiling. We see several problems with this plan. First, its legality is open to question. Second, it would worsen the coming battle over spending cuts. Moreover, it would further deepen the distrust between the two political parties. Finally, it risks being the first step down a slippery slope of debt monetization....

Zero Hedge
Bank Of America On The "Trillion Dollar Tooth Fairy" Straight "From The Land Of Fiscal Make Believe"
Posted by Tyler Durden

ROFL

But BOA cuts to the chase.

Outside of the legal questions, nothing precludes the Treasury from issuing a coin to pay down the full $16.4 trillion in debt in one fell swoop: true monetization.

This is exactly Joe Firestone's proposal, which everyone else is ignoring. BOA gets it. This is a frontal attack on issuance of Treasury securities, which are not necessary operationally. As such they constitute a subsidy for savers with no evidential public purpose. They serve a special interest rather than the public interest.

Mish — more BOA shennanigans, with Fed approval

Bank of America, at the request of counterparties, just moved a Merrill Lynch derivatives unit to an Insured Deposits unit, under protest by the FDIC.

The FDIC does not like the move because it puts the FDIC at risk. Bernanke is fine with the move, which means the Fed and FDIC are once again in an open feud about risk management

Read the rest at MISH'S Global Economic Trend Analysis, Bank of America Moves a Merrill Lynch Derivatives Unit to an Insured Deposits Unit (Putting FDIC at Risk); Fed approves Move, FDIC Doesn't

Also, Yves Smith at Naked Capitalism, Bank of America Deathwatch: Moves Risky Derivatives from Holding Company to Taxpayer-Backstopped Depositors (h/t Kevin Fathi)

UPDATE: Trader's Crucible piles on, Can We Prevent a $100 Billion+ BoA Taxpayer Ripoff? There's an important comment of Beowulf originally posted at Yves' place reposted by TC.

Let the outrage begin, or better, increase.

Numerian — "Bank of America: Too Big to Obey the Law"

I first encountered Numerian when he or she was contributing to The Agonist several years ago. He or she stuck me as someone personally familiar with banking that was also a progressive committed to reform. Numerian has a post at The Economic Populist showing how BOA simply flouted the law as the poster child of Bill Black's "control fraud." While Numerian is not yet as well known as Black or Tavakoli, his or her stuff is worth knowing about, so I am drawing this to attention.

Bank of America: Too Big to Obey the Law