Bank of America operating under secret regulatory sanction: report

Northern Boy · 07-16-2009, 08:08 PM

Thu Jul 16, 2009 5:59am EDT

(Reuters) - Bank of America Corp is operating under a secret U.S. regulatory sanction that requires it to overhaul its board and address perceived problems with risk and liquidity management, The Wall Street Journal reported, citing people familiar with the situation.

Rarely disclosed publicly, the so-called memorandum of understanding (MOU) gives banks a chance to work out their problems without the glare of outside attention, the paper said.

Financial institutions that fail to address deficiencies can be slapped with harsher penalties that include a publicly announced cease-and-desist order, the newspaper said.

According to the paper, the order was imposed in early May, shortly after shareholders of the bank stripped Chief Executive Kenneth Lewis of his duties as chairman.

The MOU is the most serious procedural action taken against Bank Of America by federal regulators since the financial crisis erupted, the newspaper said.

The report said the MOU surprised some Bank Of America executives who had not expected federal regulators to issue such a formal rebuke. It said the bank responded swiftly with six directors resigning since May 26.

Bank of America faces a series of deadlines, some at the end of July and others in August, the paper said.

Bank of America could not be immediately reached for comment by Reuters.

(Reporting by Hezron Selvi in Bangalore; Editing by Valerie Lee)

peaceandlove · 07-17-2009, 02:31 PM

Here is another interesting article about Bank of America.

Bank of America Said to Balk at Paying Backstop Fee

By David Mildenberg and Rebecca Christie

July 13 (Bloomberg) -- Bank of America Corp. is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch & Co., saying the rescue agreement was never signed and the funding never used.

Regulators contend Bank of America owes at least part of a $4 billion fee it agreed to pay in January -- even without a completed legal document -- because the company benefited from implied U.S. backing on about $118 billion of Merrill Lynch assets, such as mortgage-backed bonds, people familiar with the matter said. The Charlotte, North Carolina-based bank says it owes the Treasury nothing, according to the people, who declined to be identified because the negotiations are confidential.

Bank of America, ranked first by assets and deposits in the U.S., “got a moral commitment for insurance without tendering a check, so it appears they got something for nothing,” said Representative Brad Sherman, a California Democrat on the House Financial Services Committee. “If the government takes the risk, the government needs to be paid.”

Continues: http://www.bloomberg.com/apps/news?p...d=agE.cyK752sU

SOURCE: http://solari.com/blog/

07-16-2009, 08:08 PM	#1
Northern Boy Avalon Senior Member Join Date: Oct 2008 Location: On this Rock Posts: 1,390	Bank of America operating under secret regulatory sanction: report Thu Jul 16, 2009 5:59am EDT (Reuters) - Bank of America Corp is operating under a secret U.S. regulatory sanction that requires it to overhaul its board and address perceived problems with risk and liquidity management, The Wall Street Journal reported, citing people familiar with the situation. Rarely disclosed publicly, the so-called memorandum of understanding (MOU) gives banks a chance to work out their problems without the glare of outside attention, the paper said. Financial institutions that fail to address deficiencies can be slapped with harsher penalties that include a publicly announced cease-and-desist order, the newspaper said. According to the paper, the order was imposed in early May, shortly after shareholders of the bank stripped Chief Executive Kenneth Lewis of his duties as chairman. The MOU is the most serious procedural action taken against Bank Of America by federal regulators since the financial crisis erupted, the newspaper said. The report said the MOU surprised some Bank Of America executives who had not expected federal regulators to issue such a formal rebuke. It said the bank responded swiftly with six directors resigning since May 26. Bank of America faces a series of deadlines, some at the end of July and others in August, the paper said. Bank of America could not be immediately reached for comment by Reuters. (Reporting by Hezron Selvi in Bangalore; Editing by Valerie Lee)

07-17-2009, 02:31 PM	#2
peaceandlove Avalon Senior Member Join Date: Sep 2008 Location: Turtle Island Posts: 2,776	Re: Bank of America operating under secret regulatory sanction: report Here is another interesting article about Bank of America. Bank of America Said to Balk at Paying Backstop Fee By David Mildenberg and Rebecca Christie July 13 (Bloomberg) -- Bank of America Corp. is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch & Co., saying the rescue agreement was never signed and the funding never used. Regulators contend Bank of America owes at least part of a $4 billion fee it agreed to pay in January -- even without a completed legal document -- because the company benefited from implied U.S. backing on about $118 billion of Merrill Lynch assets, such as mortgage-backed bonds, people familiar with the matter said. The Charlotte, North Carolina-based bank says it owes the Treasury nothing, according to the people, who declined to be identified because the negotiations are confidential. Bank of America, ranked first by assets and deposits in the U.S., “got a moral commitment for insurance without tendering a check, so it appears they got something for nothing,” said Representative Brad Sherman, a California Democrat on the House Financial Services Committee. “If the government takes the risk, the government needs to be paid.” Continues: http://www.bloomberg.com/apps/news?p...d=agE.cyK752sU SOURCE: http://solari.com/blog/