Where they grind the bones to make their bread
The Karl Marx-inspired
Wall Street Journal is reporting that Bank of America used its government-backed U.S. banking position to float
dubious trades which, in turn, allowed clients to avoid paying taxes.
A current Bank of America employee has made a number of whistleblower submissions to the U.S. Securities and Exchange Commission about the role played by the U.S. banking subsidiary in financing dividend-arbitrage trades, according to copies of the submissions reviewed by The Wall Street Journal.
The employee’s submissions allege that Bank of America’s London-based Merrill Lynch International unit has extended “extreme levels of BANA leverage” to fund “increasingly aggressive and reckless” tax-avoidance trades. The submissions said the practices risked causing the bank “serious financial and reputational damage.”
What seems to pass as "too big to fail" seems to amount to "too big to give a rat's ass."
The bank last year started phasing out the practice of using funds from the U.S. unit to finance transactions by its European investment-banking arm that, among other things, helped hedge funds avoid taxes on stock dividends.
"BANA (Bank of America National Association) no longer finances dividend arbitrage activity," a Bank of America spokesperson told the WSJ.
BANA is Bank of America National Association. This is the home of BOA's U.S. retail-banking and the majority of their federally insured deposits. It pays less to borrow money than riskier investment-banking divisions. Clearly not in Bank of America's case.
“I don’t think it’s an appropriate use,” said Sheila Bair , the former chairman of the Federal Deposit Insurance Corp. “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.”
As with many of these finance, banking and tax issues, the majority of what you hear are words like "inappropriate" and "unfortunate." Reading about it, words like "criminal" and "immoral" and "greedy" and "should be punishable in a court of law" all pop to mind.