Our community and world need restructuring, and the economic system is basic.
UNTIL WE HAVE PUBLIC BANKS, Local banks and credit unions are the way to go.
Make the change! Here and there, it all adds up.
All blessings, Jude

Bank of America Has No Idea Where $2.7 Billion Went
by Brad Hoppmann

Bank of America’s bookkeepers, who really ought to know better, somehow lost track of about $2.7 billion in a maze of accounting. The missing money originated in derivative contracts it acquired in the course of buying Merrill Lynch back in 2009.An hour before markets opened on Monday, Bank of America (BAC) disclosed that the quarterly financials it released on April 16 were not quite right.
Modern bank accounting is hideously complicated in the best of circumstances. This is by design.
If it were simple, the banks couldn’t hide the fact that they create money from thin air and make promises they can’t keep.
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Before you rush to pull your money from Bank of America, please note that my headline is intended only to point out the seriousness of this. To my knowledge, your money may be as safe at BAC as any other bank in our fractional reserve system. We can all withdraw our savings on demand — unless too many of us try it at once. I may do it with my own Bank of America accounts this week.
This story is really about institutional incompetence. Last month the Federal Reserve triumphantly announced Bank of America and most other big banks had passed its tough new “stress test.”
I wrote at the time that banks had actually passed the wrong stress test. Citigroup and four others could not pass even when graded on a curve and were roundly criticized for it.
We all thought that Bank of America had passed. Bank of America itself thought it had passed, too, and on April 16 announced a stock buyback program and increased dividend. Today it canceled both.
The Federal Reserve’s press release tries to sound tough, but the Fed thought BAC passed the stress test, too. Its examiners obviously failed to examine Bank of America thoroughly.
Between Citi and now Bank of America, the last month revealed two major U.S. banks could not meet even the most minimal capital standards. In both cases, bank management and directors were blissfully unaware of their own instability until outsiders explained it to them.
I have two questions.

  • What other banks might have similar glitches hiding in their books?

  • How are depositors, bondholders, and stockholders supposed to have any confidence in banks that cannot keep track of their own assets and liabilities?
The Federal Reserve’s answer is, “Don’t worry; we’ll print more money if the bankers lose yours.”
Somehow, I don’t feel much better. Who pays for the money-printing? It never solves the problem; the bill just gets handed forward to future generations.
Brad Hoppmann
Publisher
Uncommon Wisdom Daily