A new citizen action site called F the Banks (the F stands for foreclose, I’m told) has kicked off their campaign by taking aim at Bank of America in a series of actions throughout the spring. The first one coincided with Leap Day protests put on by the Occupy movement. At Zuccotti Park, writer Matt Taibbi passed around this article, which I think he wrote exclusively for the event and not for Rolling Stone. It’s a gleeful broadside at BofA.
There are two things every American needs to know about Bank of America.
The first is that it’s corrupt. This bank has systematically defrauded almost everyone with whom it has a significant business relationship, cheating investors, insurers, homeowners, shareholders, depositors, and the state. It is a giant, raging hurricane of theft and fraud, spinning its way through America and leaving a massive trail of wiped-out retirees and foreclosed-upon families in its wake.
The second is that all of us, as taxpayers, are keeping that hurricane raging. Bank of America is not just a private company that systematically steals from American citizens: it’s a de facto ward of the state that depends heavily upon public support to stay in business. In fact, without the continued generosity of us taxpayers, and the extraordinary indulgence of our regulators and elected officials, this company long ago would have been swallowed up by scandal, mismanagement, prosecution and litigation, and gone out of business. It would have been liquidated and its component parts sold off, perhaps into a series of smaller regional businesses that would have more respect for the law, and be more responsive to their customers.
The entire article is a bill of particulars against BofA, a Too Big to Fail bank that Taibbi calls “the biggest welfare dependent in American history,” given the $45 billion in bailout cash it has taken and tens if not hundreds of billions more in no-interest loans from the Fed and other emergency programs. He highlights BofA’s move of its derivative balance sheet into an FDIC-insured part of the bank, putting taxpayers on the hook for trillions. And he mentions that BofA never keeps its promises, even after being cited for fraud. Take the lawsuit by Nevada and Arizona over BofA ignoring its obligations in the Countrywide settlement, where they delivered just 3% of the loan modifications promised, and indeed actively abused homeowners who had a legal right to the mods.
This is an important point:
Companies like Bank of America are a direct threat to national security, for many reasons. For one thing, they drive smaller, more honest banks out of business: since the market knows the federal government will never let Bank of America fail, it charges less to lend the bank money. That gives Bank of America, despite its near-junk credit rating, a competitive advantage over a smaller, regional bank that might have a better credit rating, but doesn’t have the implicit support of the federal government.
Worse still, stock market investor dollars that normally would go to more customer-friendly, more creative, and more commercially dependable firms will instead continue to flow to Too-Big-To-Fail behemoths like Bank of America, as buying stock in a company with implicit state support will be considered almost a safe-haven investment, like buying gold or Treasury bills.
There’s a deterrent factor at stake with Bank of America being kept alive by the government. Phil Angelides, the chair of the FCIC, says in a mostly good op-ed today that laws must be enforced to deter the same events from happening again and crashing the economy. Far from Tim Geithner’s boasts, we have not fixed this, certainly not when it comes to Bank of America. We look toward a future with only robo-signed, false mortgage documents from the TBTF banks if no checks are placed on their behavior.
Public Citizen has a formal request to the Financial Stability Oversight Council to break up Bank of America under section 122 of the Dodd-Frank law. Think of F the Banks as the grassroots counterpart to that. According to their Facebook page their next event falls on March 15.