You peasants:  STHU.

Clawback Risk:  Here It Comes!

I hate it when I’m right….. especially about things like this.

MF Global’s burned commodity customers turned their ire from Jon Corzine to Jamie Dimon yesterday after MF’s creditor committee, led by Dimon’s JPMorgan Chase, objected to a plan to distribute $2.1 billion to customers who have seen their accounts frozen since Halloween.

In a Manhattan bankruptcy court filing, the creditors committee, which also includes Bank of America and hedge fund Elliott Management, said they want more assurances that the $2.1 billion is not their money.

Among their requests: They want customers to agree in writing that the money they receive could be clawed back.

Got it?

Even if it turns out that your funds as a customer were stolen through a rank violation of the segregation that is supposed to be in place, JP Morgan and Bank of America, among others, want to be able to claw back your money should their claims against the bankrupt entity prove up.

So much for the alleged “separation” that the entire premise of brokerages rest upon — that your free cash and margin deposits are yours and are not “investments” in the underlying business of the firm you are choosing to trade with.

If you think this risk doesn’t apply to you and you’re in the market in any way, shape or form you’re quite-simply wrong.

This sort of demand by creditors, incidentally, that allegedly-segregated funds be downgraded ex-post-facto to that of a simple creditor is an outrage.

It is my considered opinion that the firms who make such arguments, and their executives, deserve to be dismantled.

“Once you have their money, never give it back.”

Ferengi, First Rule of Acquisition

Here is a white paper that suggests that JP Morgan and Bank of America are trying to subordinate the customers’ claims to their stolen funds and keep them in a pool of money to be distributed to the creditors by the Trustee, without any representation for the customers.  This is said to be the cause of the confusion and delay in the return of the funds.

There are also claims, not substantiated as far as I can tell, that the positions and assets that were taken from customers were liquidated in a manner so as to maximize the gains to other market participants with advantageous knowledge of those positions.  That is a serious charge that I don’t quite understand. I hope the regulators will look into the transfer of customers assets and exactly how they were treated.

I hope that the regulators and the Justice Department can sort this out quickly, and prevent any further loss of confidence in the exchanges and financial system on the part of their customers.

I think it is fair to say that this entire situation has been handled badly.   Some of the early suggestions that customers would have to take haircuts to ‘share’ the loss with each other, that the funds would be frozen for years, and the general secrecy that has blanketed this has contributed greatly to the anxiety felt by the more aware among investing public at large.

This is of concern even to those who have no funds involved in this, and have nothing to gain or lose from it personally. It should give a chill feeling to all customers, as it seems to be a shocking breach of fiduciary responsibility. It is not wise to wait until one’s own funds and assets are confiscated before asking questions and demanding answers.

As someone else has said, if a brokerage can take customer funds and assets at will, and use them for their own undisclosed speculation, and defy all guarantees, and neither they nor their accomplices are held accountable, then nothing is safe.

This white paper is obviously being told from the perspective of the customers and their attorneys.

I would be interested to hear the story or the party who received the customer assets. But as far as I know, they are silent, and their very identity remains a carefully guarded secret.

WHITE PAPER:
Background, Impacts & Solutions to MF Global’s Demise
By John L. Roe & James L. Koutoulas, Esq.
November 10, 2011

The failure of MF Global has wide ranging consequences for the American economy and its bankruptcy is being handled in a manner that is making these consequences much worse than they need to be. The freezing of customer segregated funds is having a chilling effect on global financial markets. It also has a less obvious but significant impact on the day-to-day operations of farmers, mining operators, ranchers, and other commodity consumers and producers…

In fact, the only person served by the current bankruptcy process is the Trustee who has already submitted bills to the MF Global estate at $891/hour for his time and an average of approximately $500/hour for his staff. This is the same Trustee that spent 3 years working on the Lehman bankruptcy and billed the estate over $160 million dollars despite not returning any customer funds.

If this bankruptcy is managed the same way as Lehman’s, it will be the end of the United States as a viable jurisdiction for commodity trading. Congress should use whatever power it has to prevent this from happening…

By subordinating customers with collateral in segregated funds to creditors of MF Global’s estate, the Trustee is essentially making the creditors the beneficiary of a criminal act. If MF Global comingled segregated funds with corporate assets, it was a criminal act. Paying such a creditor’s claim with a portion of those comingled funds would make them a beneficiary of that crime.

Paying JP Morgan with an Iowa farmer’s money is not only morally and legally wrong, it risks the future of the American economic model. Who would want to hold a commodities account in the United States ever again? Considering the MF Global’s clients have no representation on the creditors committee, but the big banks do (like JP Morgan and Bank of America), that is exactly what will happen without intervention.

Industry groups and regulators argue that the commodities trading industry is able to function with lighter regulations than securities trading because customer accounts are segregated from firm assets. However, in the MF Global case, there is $633M in these segregated client funds that are unaccounted for, either due to sloppy accounting or nefarious activity conducted by the firm. This has resulted in a compromise of the integrity of the segregated accounts system, and a complication of the bankruptcy proceeding by involving a number of parties with little to no experience in commodities.

The bankruptcy process has been delegated to SIPC, the securities insurance regulator, after it petitioned the bankruptcy court to begin a liquidation proceeding of MF Global’s broker-dealer. SIPC stands for “Securities Investor Protection Corporation.” It was created by the Securities Investment Protection Act of 1970 and was designed to protect owners of securities in a similar way to how the FDIC protects bank depositors. However, the vast majority of customer assets affected by this bankruptcy are NOT securities, rather they are cash and commodity futures contracts, and SIPC’s attorneys have limited experience with commodity futures contracts. Despite the fact that about 11.6% of the segregated funds have yet to be accounted for, 88.4% have been. There is no reason, whatsoever, that these funds should not be immediately released to their rightful owners.

Read the rest of this White Paper here.

Jesse’s Café Américain

Hell hath frozen.  This article is a MUST-READ! ‘He has a right to speak,’ said the cop to the banker.’

Like most bullies, the banks are cowards. They talk a big game, but if confronted with their crimes, they run for cover and go whining to “mommy.”

Today, I walked up and down a sidewalk, in front of a branch of Chase and a branch of BofA. I handed out about 250 flyers during lunch hour.

They panicked and called their private security people, then more private security and finally the cops. That’s when they found out that they didn’t have a leg to stand on.

A dedicated leftist (he’s posting on Kos, right?) trumps The So-Called “Tea Party” AGAIN.

Where are you folks?  Why aren’t you in front of these banks?

Oh, that’s right — you stand for The Constitution and they didn’t break any laws, right?

Except for all the ones they have admitted to under oath — or where someone other than a bankster went to jail, like:

• Jefferson County Alabama

• Money laundering for Mexican drug cartels.

• Intentionally and knowingly peddling crap loans

• Filing over 100,000 known perjured affidavits

• And selling crap CDOs as “good investments.”

And that’s just a “quick list” of a few examples, and by no means is exhaustive.  Every one of those is a criminal act by the way, ranging from fraud to perjury to knowingly assisting in a criminal enterprise that has been buying guns and planes to run drugs with.

So where is the insistence on the “Rule of Law”?  You know, the one you want to enforce when it comes to “One man, one woman” with marriage?  Or “no gays in the military”?  Or, for that matter, The Second Amendment?

Ah, I get it.  The rule of law only matters when it applies to a particular thing you like.  The rest of the time, it doesn’t count at all.  In fact, you’ll willfully close your eyes and ignore the lawbreaking when your buddy does it; the screaming only commences when your political enemy is a participant.

My objection, ladies and gentlemen, is that this is no different than what the Democrats do.  “Health Care reform” anyone?  The Rule of Law will be enforced to make you buy health insurance, but not to protect your right to own and bear a firearm or to choose NOT to engage in commerce.

No difference here folks.  The so-called “Tea Party” is a black-sharpie marker 10 Commandments serial violator just as are the die-hard liberals on the left.

But to see someone actually engage in First Amendment speech in front of a bank and document it on The Daily Kos, which is about as far removed from my political views as one could be and still manage to find the points on the vector within the orbit of Mars, well, that’s remarkable.

What’s disgusting is that this story appeared on The Daily Kos before it appeared on a Tea Party-affiliated web site.

Pack it up or reform folks, because as things stand here and now you’ve no right to use the visage and memory of Sam Adams.

….and it’s depositors.  There’s not enough attention being paid to the shift of Bank of America’s CDS (credit default swap) portfolio from its uninsured investments to its FDIC insured commercial banking account.  In plain language this means if Bank of America goes bankrupt (and this is practically assured at this point), YOU the depositors are second in line behind approximately $50 TRILLION in CDS.  It means that those investors of CDS will be paid by the FDIC before YOU are.  In order to make it even possible for the FDIC to pay those investors, they will have to use taxpayer funds.   So far, this is just Bank of America, but since this required absolutely no public disclosure or discussion, nor did your Member of Congress get to vote on this, how long will it be before the rest of the banks leveraged up to their eyeballs do the exact same thing?  The best way to describe the overall concept is:  Taxation Without Representation.

Are we having fun yet?

Just listen to Reggie Middleton from BoomBustBlog explain our situation:

http://www.youtube.com/watch?v=lOuOz2mec3Y

http://www.youtube.com/watch?v=igoDhHyDiHY

http://www.youtube.com/watch?v=IEw25ByILkY

Yes, we’ve all been bamboozled, that’s for sure.  We’re also being raped and robbed.

Many people are furious that the Federal Reserve and Bank of America have initiated a coup to dump billions of dollars of losses on the American people (and see this).

Many are suggesting that the “Occupy” protesters rally to stop this robbery.

One of the top stories currently on Reddit (one of the top social media sites), is:

OWS and 99%: Please pay attention to this and stop it from happening (BofA and Fed socializing losses)

I understand that the Occupy protesters are, in fact, currently debating making a statement on this theft.

Currently, there are two competing draft statements. This one is from someone very savvy on understanding how the average American thinks:

A portion of the 53 trillion dollars of derivatives (yes that’s with a t, about the size of the entire global economy) transferred to Bank of America’s parent company from Merrill Lynch in 2008 has recently been transferred to Bank of America.

Derivatives contracts in a bank are paid before anyone else gets paid.

Therefore, these derivatives contracts would be paid before depositors receive their money. These people just cut in front of you.

It’s very simple, the reason that banks and trading houses were originally separated was to prevent this sort of thing. What’s really going to happen is that the government is going to end up bailing out the FDIC … so this will end up being a government bailout.

You’ll end up getting shafted, either by derivatives holders cutting in front of you or by your having to bail out the FDIC so it can bail out banks depositors. Either way, this is yet another instance of looting by the big banks and big government.

Just say no … don’t let this stand.

And this one is from two people who are experts on the technical issues involved:

We denounce Bank of America’s transfer of high risk derivatives to its federally insured accounts. This is yet another example of systemically dangerous institutions, big banks like BofA and JPM, once again attempting to shift potentially substantial losses onto the backs of hardworking Americans. The fact that the Federal Reserve supports this action demonstrates Ben Bernanke’s complicity and/or gross incompetence in supporting the Wall Street elite at the expense of tax paying citizens.

Updates as they develop …

George Washington for ZeroHedge

Is It Time To Close Down Bank of America?

This is precisely the sort of arbitrage that ought to lead people straight to a nice date with Bubba:

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

So let’s see what we have here.

Bank customer initiates a swap position with Bank.  In doing so they intentionally accept the credit risk of the institution they trade with.

Later they get antsy about perhaps not getting paid.  Bank then shifts that risk to a place where people who deposited their money and had no part of this transaction wind up backstopping it.

This effectively makes the depositor the “guarantor” of the swap ex-post-facto.

That the regulators are allowing this is an outrage.

If you’re a Bank of America customer and continue to be one you deserve whatever you get down the line, whether it comes in the form of higher fees and costs assessed upon you or something worse.

Incidentally, the amount of exposure in question is unknown but Bank of America has some $53 trillion in total derivative exposure (out of $75 trillion in total between it and Merrill, which is also a subsidiary of the holding company.)

Of course we do not know how much was shifted and BAC won’t comment on the record — but this sort of movement of liabilities should be flatly prohibited as the counterparty in question accepted the risk of the entity they traded with originally when the transaction was first initiated.  That the firm’s ratings have deteriorated and thus it may be required to post additional capital against these positions by those counterparties does not justify shifting the risk to depositors simply so the bank can avoid posting collateral against a deteriorating credit picture, which for all intents and purposes shifts the risk to the taxpayer since the FDIC has a line of credit at Treasury.  Never mind that posting that collateral should not materially impair operations.

After all the firm does have an excellent capital ratio.  Why they said so just this morning!

I can think of a handful of rather bemusing (and some not-very-funny) possibilities along the line of “speck into a snowball” issues that may arise in time on this deal, but for now I’ll sit with a wry smile and see what develops since at this point I have nothing to go on other than conjecture.  Feel free to speculate yourself in the comment section if you’d like… after all that’s exactly what Bank of America openly invited when they refused to document exactly what was moved, in what amounts, what the actual net exposure is and why the step was taken.

We need to rename Bank of America DAFFY DUCK!

http://www.youtube.com/watch?v=LyPFQKpRnd0

Karl Denninger

*************************************************************************

Adding to Karl’s analysis, from the Bloomberg article cited:

In 2009, the Fed granted Section 23A exemptions to the banking arms of Ally Financial Inc., HSBC Holdings Plc, Fifth Third Bancorp, ING Groep NV, General Electric Co., Northern Trust Corp., CIT Group Inc., Morgan Stanley and Goldman Sachs Group Inc., among others, according to letters posted on the Fed’s website.

Anyone remember those 23A Letter exemptions?  We wrote about those extensively back in 2008.  These letters basically allowed the banks to run two sets of books.  One set was on the record, meaning that was from where tier 1 capital ratios (among other things) were derived, and another set of books that no one got to see and were not counted in tier 1 capital.  Guess what’s on the hidden set of books?  If you guessed a bunch of defaulted or defaulting debt, you’d win the prize.  So, what is being run here is a massive accounting fraud; one that would make Arthur Andersen of Enron notoriety look like angels.

They’re using depositors’ money to backstop their bad loans and the government made it LEGAL for them to do so.   These aren’t just bad mortgages either, these are various and sundry toxic products with which BAC and other big Wall Street banks were playing hot-potato for nearly a decade.  Most homeowners have taken their loss; they’ve been foreclosed upon or will be in the near future, but where are the losses to the banks for their purposeful and intentional selling of mortgages to people who couldn’t pay?!  Those losses have all been shifted to the taxpayer and since that apparently, wasn’t adequate, they have now shifted it to THEIR DEPOSITORS!  One set of laws for them and another set for us.

Tell me again why Glass-Steagall was repealed?  Oh yeah, the banks didn’t want it; so, Congress obliged.  Why hasn’t anyone on EITHER side of the aisle proposed an immediate reinstatement of Glass-Steagall?  Same reason.  Banks don’t want it and they pay Congress to make sure they won’t get it.

So, to summarize for those in the cheap seats, Bank of America is essentially holding a gun to the heads of their depositors and daring anyone to screw with them.

Message to anyone still having money on deposit with Bank of America:  You’re being held hostage.

Discussion (registration required to post)

This story from Bloomberg just hit the wires this morning.  Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.

This means that the investment bank’s European derivatives exposure is now backstopped by U.S. taxpayers.  Bank of America didn’t get regulatory approval to do this, they just did it at the request of frightened counterparties.  Now the Fed and the FDIC are fighting as to whether this was sound.  The Fed wants to “give relief” to the bank holding company, which is under heavy pressure.

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input.  You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.

What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan.  Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.

This is a recipe for Armageddon.  Bernanke is absolutely insane.  No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks.  His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began.

—

Bloomberg

Excerpt:

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.

“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”

Moody’s Downgrade

The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter.

Keeping such deals separate from FDIC-insured savings has been a cornerstone of U.S. regulation for decades, including last year’s Dodd-Frank overhaul of Wall Street regulation.

U.S. Bailouts

Bank of America benefited from two injections of U.S. bailout funds during the financial crisis. The first, in 2008, included $15 billion for the bank and $10 billion for Merrill, which the bank had agreed to buy. The second round of $20 billion came in January 2009 after Merrill’s losses in its final quarter as an independent firm surpassed $15 billion, raising doubts about the bank’s stability if the takeover proceeded. The U.S. also offered to guarantee $118 billion of assets held by the combined company, mostly at Merrill.

Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.

Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law.

“Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said. The discount window has been open to banks as the lender of last resort since 1914.

Continue reading at Bloomberg…

 The Daily Bail

Discussion (registration required to post)

You want to know why everyone in this country hates you and wants you dead, you big stupid f*%’ing bank?

Here’s why, pay attention:

(Reuters) – Bank of America Corp will pay $11 million to ousted executives Joe Price and Sallie Krawcheck, a large payout at a time when banks face protests over pay but smaller than the eight-figure packages some executives received before the financial crisis.

Krawcheck — a former Citigroup Inc executive who came to Bank of America in 2009 and was one of the top-ranking women on Wall Street — will receive a one-time payment of $5.15 million, according to separation agreements filed by the bank on Friday.

Price, a Bank of America veteran, gets $4.15 million. Each will also receive $850,000 over a one-year period.

Price was head of consumer banking and Krawcheck led wealth and investment operations.

Elevenmilliondollars?  What the hell world are you inhabiting?  Eleven million dollars for two departing executives because things didn’t work out?  I’m sorry, but were these two executives of Derek Jeter and Alex Rodriguez-level importance for your organization?  Is that why there are severance deals like this in place?  Or are you just completely psychotic?

It’s not that this isn’t your prerogative as a private company – it is.  But seriously, numbers like these at a time when you’re instituting added fees on customer accounts just sound farcical, almost like you’re making these payments to get a reaction out people.

You look completely ridiculous with news like this at a time when thousands of people are massing in every major city in the country to make the case that you don’t deserve to exist.  At a time when you’re being investigated for employing robo-signers just to maintain a certain level of foreclosures processed per month. At a time when you’re laying off rank-and-file employees not by the hundreds, not by the thousands – but in the tens of thousands.  At a time when retired seniors, desperately seeking income, have been pushed into annuities, life settlements, commodities and junk bonds because of the zero percent interest rate policy that was meant to nurse you and your balance sheet back to health – and this is what you do with the money?  With OUR money?

Are you crazy?

You pay fired executives more in severance than the average American worker will earn in a lifetime. For most people on the outside looking in, this seems like it’s from outer space, another world entirely. These numbers just do not exist to regular human beings, they cannot be fathomed. The ordinary American is not a class warrior or a woe-is-me whiner coveting the rewards of others – the ordinary American simply believes that extraordinary rewards should go to those who do extraordinary things, not to paper-pushing failures at parasite banks.

So let me give you a hint that will save you countless hours and millions of dollars spent on consultants and the public relations morons you keep on staff:  This is why they hate you.  This very type of thing, while just a single example, epitomizes the piggish mentality that has set you apart from everyone else.  This is why they’re marching against you and calling for boycotts and writing their politicians.  And this is why your whole model and way of life is on its way to being dead.  Forever.

You want to roll your eyes and make snide remarks about “dumb college kids” and “socialists”?  Go ahead but you’re be missing the point.  Because it is the small business owner who’s really been wronged here, not the fringe elements you mockingly dismiss.  The business owner whose losses are not socialized like yours, the business owner without the government in his pocket, the business owner who is forced to play by the rules that you have paid to have written.  He’s not a hippie, he’s not a Marxist…but he’s waking up, dummy.

You blew the second chance you got with TARP to re-enter society as a productive component of commerce.  You went back to bonus-swilling, full-retard mode as though nothing ever happened and 13 million people weren’t sitting around in their post credit-bubble joblessness for three years now.  Your tone-deafness and utter disconnection from the rest of the country has produced something extraordinary – You’ve managed to awaken one of the most indolent, lethargic and apathetic populaces in the history of the world.  You’ve now stirred a slumbering nation of 300 million from it’s Entennman’s and Zoloft-induced stupor.  America is awake now and it’s pissed.

Good luck with that.

 Joshua M. Brown – The Reformed Broker

REALLY?!  HOW MUCH MORE CRIMINAL DO THESE BANKS HAVE TO GET BEFORE PEOPLE WAKE UP AND REALIZE WE ARE RULED BY THESE TOO-BIG-TO-FAIL BANKS?!!  HOW LONG ARE YOU GOING TO STAND FOR THIS AMERICA?!

http://www.youtube.com/watch?v=Db_P0wHsSz0

STOP THE LOOTING & START PROSECUTING!

Bank of America has taken “proactive” measures to manage traffic following a bad decision to hike fees on debit cards.

The bank has been swamped with traffic and instead of increasing servers, has taken measures in the bank’s words “could result in some customers experiencing slowness or temporarily having access issues.”

Lovely.

Please consider BofA website malfunctioning again

Bank of America’s website, plagued by problems Friday and Saturday but supposedly fixed on Sunday, wasn’t working again Monday.

Many users trying to access bankofamerica.com get a message saying the home page is temporarily unavailable. But spokeswoman Tara Burke said customers who experience slowness or can’t get into their accounts should keep trying.

Burke said the access problems are a result of the bank managing traffic volume during peak use.

“We’ve simply taken some proactive measures to manage customer traffic during peak hours during the day,” she said. “That could result in some customers experiencing slowness or temporarily having access issues.”

She declined to say whether volume has surged in recent days.

The problems began Friday, a day after the bank said it would start charging a $5 monthly fee for customers using debit cards. Burke insisted there’s no connection. The delays and the home page message persisted Saturday, but Burke said Sunday that things were fine.

Bank of America (BAC) Plunges Below $6

click on chart for sharper image

Shared of Bank of America have solidly taken out the “Buffett is Buying” low reached in August. The spike to $8.79 was a good time to unload if you were still holding this turkey in any size.

Warren Buffett did not buy Bank of America shares,  he got a sweet deal to buy debt that came with a free option to buy shares. The move was an obvious ploy by Bank of America to put a floor on the share price. It did not work.

Time to Switch Banks

My recommendation is that if you are at any bank that raises debit card  fees, switch banks. That Bank of America’s servers are flooded is a  welcome sign that customers have had enough.

Adding insult to injury, the “proactive” way Bank of America handled this maneuver suggests blatant incompetence.

Addendum:

“PT” who lives in Seattle writes …

Is  this blatant incompetence and/or an effort to slow customer transfers?  It’s time for BofA customers, such as myself, to take some of our own  proactive measures and move our accounts to a bank which is capable of  handling “peak traffic”.

I bank with BofA in Washington, which  has a totally separate portal for accessing accounts. It has been  offline since 7:00 am Seattle time, when I first tried to access my  account, and that is hardly what I would call a “peak traffic” hour. An  electronic run on the bank prompted by customers fed up with their  incompetence and, most recently, their plan to impose a fee on debit  card usage.

Mike  “Mish”  Shedlock

Global Economic Analysis