Shoot Bank Of America Now—-The Case For Super Glass-Steagall Is Overwhelming
by David Stockman •
So this morning comes yet another expose in the Wall Street Journal about the depredations of Bank America (BAC). Not surprisingly, at the center of this latest malefaction is still another set of schemes to grossly abuse the deposit insurance safety net and enlist the American taxpayer in the risky business of financing high-rolling London hedge funds.
In this case, the abuse consisted of BAC funded and enabled tax avoidance schemes with respect to stock dividends—–arrangements which happen to be illegal in the US. No matter. BAC simply arranged for them to be executed for clients in London where they apparently are kosher, but with funds from BAC’s US insured banking entity called BANA, which most definitely was not kosher at all.
As to the narrow offense involved—-that is, the use of insured deposits to cheat the tax man—-the one honest official to come out of Washington’s 2008-2009 bank bailout spree, former FDIC head Sheila Bair, had this to say:
“I don’t think it’s an appropriate use…….. Activities with a substantial reputational risk… should not be done inside a bank. You have explicit government backing inside a bank. There is taxpayer risk there.”She is right, and apparently in response to prodding by its regulator, BAC has now ended the practice, albeit after booking billions in what amounted to pure profits from these illicit trades.
But that doesn’t end the matter. This latest abuse by BAC’s London operation is, in fact, just the tip of the iceberg—–the symptom of an unreformed banking regime that is rotten to the core and that remains a clear and present danger to financial stability and true economic recovery. And not by coincidence there stands at the very epicenter of that untoward regime a $2 trillion financial conglomerate that is a virtual cesspool of malfeasance, customer abuse, operational incompetence, legal and regulatory failure, downright criminality and complete and total lack of accountability at the Board and top executive level.
In short, BAC’s six-year CEO, Brian Moynihan, is guilty of such chronic malfeasance and serial management failure that outside the cushy cocoon of TBTF he would have been fired long ago. Indeed, it is hard to believe that he would have survived very long even running a small chain of car washes in east Nebraska.
Since 2009, in fact, BAC has been the number one employer of criminal and regulatory defense attorneys in the USA and the armies of accountants, consultants, forensic specialists, etc. which support them. So vast is the dragnet of lawsuits and legal actions that have been brought against it that BAC’s defense team amounts to an entire industry that should have its very own SIC code at the Commerce Department’s data mills.