Tag Archives: bank of america

Setting the Record Straight One More Time: BofA’s Rebecca Mairone Fined $1Million; BofA Must Pay $1.3Billion

By L. Randall Wray

Now here’s Déjà vu all over again. You might remember the name Rebecca Mairone from a few years ago. She’s back in the news:

“Rebecca Mairone, formerly a top official at Countrywide Financial, has been named in an amended complaint filed earlier this month by Preet Bharara, the U.S. Attorney for the Southern District of New York, against Countrywide and its parent Bank of America. The suit alleges that Mairone, as chief operating officer for Countrywide’s Full Spectrum Lending division in 2007, set up a program dubbed the “High Speed Swim Lane,” or “HSSL,” or “Hustle,” to speed up the origination of mortgage loans, including increasingly shady subprime loans. The government claims the alleged Hustle ultimately cost its sponsored entities Fannie Mae and Freddie Mac more than $1 billion in losses.

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The New York Times Authors the Most Ironic Sentence of the Crisis

By William K. Black

The author of the most brilliantly comedic statement ever written about the crisis is Landon Thomas, Jr.  He does not bury the lead.  Everything worth reading is in the first sentence, and it should trigger belly laughs nationwide.

“Bank of America, one of the nation’s largest banks, was found liable on Wednesday of having sold defective mortgages, a jury decision that will be seen as a victory for the government in its aggressive effort to hold banks accountable for their role in the housing crisis.”

“The government,” as a statement of fact so indisputable that it requires neither citation nor reasoning, has been engaged in an “aggressive effort to hold banks accountable for their role in the housing crisis.”  Yes, we have not seen such an aggressive effort since Captain Renault told Rick in the movie Casablanca that he was “shocked” to discover that there was gambling going on (just before being handed his gambling “winnings” which were really a bribe).

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Is B of A the Most Embarrassing Department of Justice Suit Ever?

By William K. Black

The Department of Justice’s (DOJ) latest civil suit against Bank of America (B of A) is an embarrassment of tragic proportions on multiple dimensions.  In this version I explore “only” seven of its epic fails.

The two most obvious fails (except to the most of the media, which failed to mention either) are that the DOJ has once again refused to prosecute either the elite bankers or bank that committed what the DOJ describes as massive frauds and that the DOJ has refused to bring even a civil suit against the senior officers of the banks despite filing a complaint that alleges facts showing that those officers committed multiple felonies that made them wealthy by causing massive harm to others.  Those two fails should have been the lead in every article about the civil suit.

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William Black Provides Details of the Government’s Civil Lawsuit Against Bank of America

On 10/24/12, William Black appeared on WBAI’s Pacifica Radio with Linda Perry discussing the Government’s billion dollar civil lawsuit against Bank of America / Countrywide. You can listen to the program here.

Bank of America’s Death Rattle

Not with a Bang, but a Whimper: Bank of America’s Death Rattle

By William K. Black

Bob Ivry, Hugh Son and Christine Harper have written anarticle that needs to be read by everyone interested in the financialcrisis.  The article (available here) is entitled: BofA Said to Split RegulatorsOver Moving Merrill Derivatives to Bank Unit. The thrust of their story is that Bank of America’s holdingcompany, BAC, has directed the transfer of a large number of troubled financialderivatives from its Merrill Lynch subsidiary to the federally insured bank Bank of America (BofA).  The story reports that the FederalReserve supported the transfer and the Federal Deposit Insurance Corporation(FDIC) opposed it.  Yves Smith of Naked Capitalism has written an appropriately blistering attack on this outrageous action, which puts thepublic at substantially increased risk of loss.  

I write toadd some context, point out additional areas of inappropriate actions, and adda regulatory perspective gained from dealing with analogous efforts by holdingcompanies to foist dangerous affiliate transactions on insureddepositories.  I’ll begin by adding somehistorical context to explain how B of A got into this maze of affiliateconflicts.

KenLewis’ “Scorched Earth” Campaign against B of A’s Shareholders

AcquiringCountrywide: the High Cost of CEO Adolescence

During this crisis, Ken Lewis went on a buying spreedesigned to allow him to brag that his was not simply bigger, but thebiggest.  Bank of America’s holdingcompany – BAC – became the acquirer of last resort.  Lewis began his war on BAC’s shareholders byordering an artillery salvo on BAC’s own position.  What better way was there to destroyshareholder value than purchasing the most notorious lender in the world –Countrywide.  Countrywide was in themidst of a death spiral.  The FDIC wouldsoon have been forced to pay an acquirer tens of billions of dollars to induceit to take on Countrywide’s nearly limitless contingent liabilities and toxicassets.  Even an FDIC-assistedacquisition would have been a grave mistake. Acquiring thousands of Countrywide employees whose primary mission wasto make fraudulent and toxic loans was an inelegant form of financialsuicide.  It also revealed the negligiblevalue Lewis placed on ethics and reputation.  
But Lewis did not wait to acquire Countrywide with FDICassistance.  He feared that a rival wouldacquire it first and win the CEO bragging contest about who had the biggest,baddest bank.  His acquisition ofCountrywide destroyed hundreds of billions of dollars of shareholder value andled to massive foreclosure fraud by what were now B of A employees. 

But there are two truly scary parts of the story of B of A’sacquisition of Countrywide that have received far too little attention.  B of A claims that it conducted extensive duediligence before acquiring Countrywide and discovered only minor problems.  If that claim is true, then B of A has beendoomed for years regardless of whether it acquired Countrywide.  The proposed acquisition of Countrywide was hugeand exceptionally controversial even within B of A.  Countrywide was notorious for its fraudulentloans.  There were numerous lawsuits andformer employees explaining how these frauds worked. 

B of A is really “Nations Bank” (formerly named NCNB).  When Nations Bank acquired B of A (the SanFrancisco based bank), the North Carolina management took completecontrol.  The North Carolina managementdecided that “Bank of America” was the better brand name, so it adopted thatname.  The key point to understand isthat Nations/NCNB was created through a large series of aggressive mergers, sothe bank had exceptional experience in conducting due diligence of targets foracquisition and it would have sent its top team to investigate Countrywidegiven its size and notoriety.  Theacquisition of Countrywide did not have to be consummated exceptionallyquickly.  Indeed, the deal had an “out”that allowed B of A to back out of the deal if conditions changed in an adversemanner (which they obviously did).  If Bof A employees conducted extensive due diligence of Countrywide and could notdiscover its obvious, endemic frauds, abuses, and subverted systems then theyare incompetent.  Indeed, that word istoo bloodless a term to describe how worthless the due diligence team wouldhave had to have been.  Given the manyacquisitions the due diligence team vetted, B of A would have been doomedbecause it would have routinely been taken to the cleaners in those earlierdeals.

That scenario, the one B of A presents, is not credible.  It is far more likely that B of A’s seniormanagement made it clear to the head of the due diligence review that the dealwas going to be done and that his or her report should support that conclusion.  This alternative explanation fits well with Bof A’s actual decision-making. Countrywide’s (and B of A’s) reportedfinancial condition fell sharply after the deal was signed.  Lewis certainly knew that B of A’s actualfinancial condition was much worse than its reported financial condition andhad every reason to believe that this difference would be even worse atCountrywide given its reputation for making fraudulent loans.  B of A could have exercised its option towithdraw from the deal and saved vast amounts of money.  Lewis, however, refused to do so.  CEOs do not care only about money.  Ego is a powerful driver of conduct, and CEOscan be obsessed with status, hierarchy, and power.  Of course, Lewis knew he could walk awaywealthy after becoming a engine of mass destruction of B of A shareholdervalue, so he could indulge his ego in a manner common to adolescent males.   

AcquiringMerrill Lynch: the Lure of Liar’s Loans

Merrill Lynch is the quintessential example of why it wascommon for the investment banks to hold in portfolio large amounts ofcollateralized debt obligations (CDOs). Some observers have jumped to the naïve assumption that this indicatesthat the senior managers thought the CDOs were safe investments.  The “recipe” for an investor maximizingreported income differs only slightly from the recipe for lenders.

  1. Grow rapidly by
  2. Holding poor quality assets that provide a premium nominal yield while
  3. Employing extreme leverage, and
  4. Providing only grossly inadequate allowances for future losses on the poor quality assets
Investment banks that followed this recipe (and most largeU.S. investment banks did), were guaranteed to report record (albeit fictional)short-term income.  That income wascertain to produce extreme compensation for the controlling officers.  The strategy was also certain to produceextensive losses in the longer term – unless the investment bank could sell itslosing position to another entity that would then bear the loss. 

The optimal means of committing this form of accountingcontrol fraud was with the AAA-rated top tranche of CDOs.  Investment banks frequently purport to basecompensation on risk-adjusted return.  Ifthey really did so investment bankers would receive far less compensation.  The art, of course, is to vastly understatethe risk one is taking and attribute short-term reported gains to the officer’s brilliance in achievingsupra-normal returns that are not attributable to increased risk(“alpha”).  Some of the authors of Guaranteed to Fail call this processmanufacturing “fake alpha.” 

The authors are largely correct about “fake alpha.”  The phrase and phenomenon are correct, butthe mechanism they hypothesize for manufacturing fake alpha has no basis inreality.  They posit honest gambles on“extreme tail” events likely to occur only in rare circumstances.  They provide no real world examples.  If risk that the top tranche of a CDO wouldsuffer a material loss of market values was, in reality, extremely rare then itwould be impossible to achieve a substantial premium yield.  The strategy would diminish alpha rather thanmaximizing false alpha.  The risk thatthe top tranche of a CDO would suffer a material loss in market value washighly probable.  It was not a tailevent, much less an “extreme tail” event. CDOs were commonly backed by liar’s loans and the incidence of fraud inliar’s loans was in the 90% range.  Thetop tranches of CDOs were virtually certain to suffer severe losses as soon asthe bubble stalled and refinancing was no longer readily available to delay thewave of defaults.  Because liar’s loanswere primarily made to borrowers who were not creditworthy and financiallyunsophisticated, the lenders had the negotiating leverage to charge premiumyields.  The officers controlling therating agencies and the investment banks were complicit in creating a corruptsystem for rating CDOs that maximized their financial interests by routinelyproviding AAA ratings to the top tranche of CDOs “backed” largely by fraudulentloans.  The combination of the fake AAArating and premium yield on the top tranche of fraudulently constructed (andsold) CDOs maximized “fake alpha” and made it the “sure thing” that is one ofthe characteristics of accounting control fraud (see Akerlof & Romer 1993;Black 2005).  This is why many of theinvestment banks (and, eventually, Fannie and Freddie) held substantial amountsof the top tranches of CDOs.  (A similardynamic existed for lower tranches, but investment banks also found it muchmore difficult to sell the lowest tranches.)  

Merrill Lynch was known for the particularly large CDOpositions it retained in portfolio. These CDO positions doomed Merrill Lynch.  B of A knew that Merrill Lynch had tremendouslosses in its derivatives positions when it chose to acquire MerrillLynch. 

Giventhis context, only the Fed, and BAC, could favor the derivatives deal

Lewis and his successor, Brian Moynihan, have destroyednearly one-half trillion dollars in BAC shareholder value.  (See my prior post on the “Divine Right ofBank Profits…”)  BAC continues todeteriorate and the credit rating agencies have been downgrading it because ofits bad assets, particularly its derivatives. BAC’s answer is to “transfer” the bad derivatives to the insured bank – transforming (alaIreland) a private debt into a public debt. 

Banking regulators have known for well over a century aboutthe acute dangers of conflicts of interest. Two related conflicts have generated special rules designed to protectthe bank and the insurance fund.  Onerestricts transactions with senior insiders and the other restrictstransactions with affiliates.  The scamis always the same when it comes to abusive deals with affiliates – theytransfer bad (or overpriced) assets or liabilities to the insured institution.  As S&L regulators, we recurrently facedthis problem.  For example, Ford MotorCompany attempted to structure an affiliate transaction that was harmful to theinsured S&L (First Nationwide).  Thebank, because of federal deposit insurance, typically has a higher creditrating than its affiliate corporations.

BAC’s request to transfer the problem derivatives to B of Awas a no brainer – unfortunately, it was apparently addressed to officials atthe Fed who meet that description.  Anycompetent regulator would have said: “No, Hell NO!”  Indeed, any competent regulator would havedeveloped two related, acute concerns immediately upon receiving therequest.  First, the holding company’scontrolling managers are a severe problem because they are seeking to exploitthe insured institution.  Second, thesenior managers of B of A acceded to the transfer, apparently without protest,even though the transfer poses a severe threat to B of A’s survival.  Their failure to act to prevent the transfercontravenes both their fiduciary duties of loyalty and care and should lead totheir resignations.

Now here’s the really bad news.  First, this transfer is a superb “naturalexperiment” that tests one of the most important questions central to thehealth of our financial system.  Does theFed represent and vigorously protect the interests of the people or thesystemically dangerous institutions (SDIs) – the largest 20 banks?  We have run a real world test.  The sad fact is that very few Americans willbe surprised that the Fed represented the interests of the SDIs even though theywere directly contrary to the interests of the nation.  The Fed’s constant demands for (andcelebration of) “independence” from democratic government, combined withslavish dependence on and service to the CEOs of the SDIs has gone beyondscandal to the point of farce.  I suggestorganized “laugh ins” whenever Fed spokespersons prate about their“independence.”

Second, I would bet large amounts of money that I do nothave that neither B of A’s CEO nor the Fed even thought about whether thetransfer was consistent with the CEO’s fiduciary duties to B of A (v.BAC).  We took depositions during theS&L debacle in which senior officials of Lincoln Savings and its affiliateswere shocked when we asked “whose interests were you representing – the S&Lor the affiliate?”  They had obviouslynever even considered their fiduciary duties or identified their actualclient.  We blocked a transaction thatwould have caused grave injury to the insured S&L by taking the holdingcompany (Pinnnacle West) off the hook for its obligations to the S&L.  That transaction would have passed routinely,but we flew to the board of directors meeting of the S&L and reminded themthat their fiduciary duty was to the S&L, that the transaction was clearlydetrimental to the S&L and to the benefit of the holding company, and thatwe would sue them and take the most vigorous possible enforcement actionsagainst them personally if they violated their fiduciary duties.  That caused them to refuse to approve thetransaction – which resulted in a $450 million payment from the holding companyto the S&L.  (I know, $450 millionsounds quaint now in light of the scale of the ongoing crisis, but back then itpaid for our salaries in perpetuity.) 

Third, reread the Bloomberg column and wrap your mind aroundthe size of Merrill Lynch’s derivatives positions.  Next, consider that Merrill is only one,shrinking player in derivatives. Finally, reread Yves’ column in NakedCapitalism where she explains (correctly) that many derivatives cannot beused safely.  Add to that my point abouthow they can be used to create a “sure thing” of record fictional profits,record compensation, and catastrophic losses. This is particularly true about credit default swaps (CDS) because ofthe grotesque accounting treatment that typically involves no allowances forfuture losses. (FASB:  you must fix thisurgently or you will allow a “perfect crime.”). It is insane that we did not pass a one sentence law repealing theCommodities Futures Modernization Act of 2000. Between the SDIs, the massive, sometimes inherently unsafe and largelyopaque financial derivatives, the appointment, retention, and promotion offailed anti-regulators, and the continuing ability of elite control frauds toloot with impunity we are inviting recurrent, intensifying crises. 

I’ll close with a suggestion and request to reporters.  Please find out who within the Fed approvedthis deal and the exact composition of the assets and liabilities that weretransferred.

To keep up with Bill’s work follow on Twitter @WilliamKBlack and @deficitowl

The Divine Right of Bank Profits: A Reading from the Book of B of A

By William K. Black

Bank of America’s (B of A’s) customers are furious at B of A’s $5 monthlyfee on debit cards.  The normal business’mantra is: “the customer is always right.” B of A, however, is a Systemically Dangerous Institution (SDI), so it ison a heavenly plane transcending the normal rules of business, markets, ormorality.  For B of A, the customer isalways slight(ed).  “I have aninherent duty as a CEO of a publicly owned company to get a return for myshareholders,” Brian Moynihan said.

BofA chief: We have a ‘right to make aprofit’

Moynihan’s statement demonstrates two of the verities of the ongoingfinancial crisis.  First, the CEOs of ourSDIs are terrible bankers, but they are superb at standup.  Second, much of the business press is sobrain dead or sycophantic that it now plays the role of the Washington Generalsas the hapless faux opponents of theHarlem Globetrotters (the SDIs’ CEOs). None of the reporters asked Moynihan the obvious questions:

·     Is that “return for my shareholders” supposed tobe positive?
·     Given that you and your predecessor (Ken Lewis)combined to cause your shareholders a 90% loss on their investments – nearlyone-half trillion dollars, when can we expect your resignation and return ofyour compensation in accordance with your “inherent duty” to thoseshareholders?

I found myself davening in awe atMoynihan’s chutzpah.  Only a handful of CEOs in history haveravaged “my” shareholders worse than the Lewis/Moynihan tandem.  How he had the nerve to sing a hymn ofself-praise to his devotion to those shareholders – and how the business presslet him get away with his sanctimonious chorus – is beyond my Midwesternsensibilities.

Bankof America once stood for the “little fellows”

Today, “Bank of America” is only a name appropriated by anacquirer for its marketing value.  In1904, Mr. Giannini founded the Bank of Italy in San Francisco, California.  The Bank of Italy was a radical departurefrom traditional commercial banking.  Itspecialized in making loans to the Italian-American entrepreneurs that ran manysmall businesses in California and in serving working class customers, many ofthe recent immigrants. Giannini eventually changed its name to Bank of America.
The real B of A was acquired in 1998 by NationsBank, aCharlotte, North Carolina bank founded by Southern elites to cater to Southernelites.  NationsBank changed its name toBank of America because of marketing considerations, but its managers – basedin Charlotte – control B of A.  The B ofA that Giannini proudly boasted was created to serve “the little fellows” wastransformed by the Charlotte-based CEOs into a typical SDI. 

 Lewis and Moynihan’s “One-Two” Knockout Punchagainst B of A’s Shareholders

Moynihan is a lawyer. His annual base salary is around $2 million.  He is CEO because his predecessor exercisedhis “inherent duty … to get a return for my shareholders” by producing aspectacularly negative return.  Moynihanwas named B of A’s CEO on December 16, 2009, replacing Ken Lewis, whose 2007compensation was roughly $20 million. Lewis was the man of massive ego and minimal talent and ethics whodecided that what would ensure B of A’s winning the race to the moral bottomamong the SDIs was acquiring the most notorious lender in the world –Countrywide – in 2008 for $4.1 billion. Banking has such an exceptional sense of irony that he was named “Bankerof the Year” in 2008.  If he had admittedto being a pedophile, would they have named him Banker of the Decade?     

B of A’s latest closing share price was $5.90 (10/7/11) v.the closing price of $15.10 on December 16, 2008 when Moynihan was namedCEO.  Endemic criminal conduct by B of Ain the mortgage foreclosure process, combined with the massive accounting fraudinherent in Countrywide’s operations combined to cause a loss of slightly over60% to the B of A shareholders. Moynihan’s claim that B of A’s losses were caused by the Dodd-Frank Actare false and pathetic.  If a juniorteller refused to accept responsibility for her $50 cash error and offered sucha lame excuse blaming others Moynihan would fire her on the spot. 

On September 4, 2004, the FBI testified in open session before Congressabout an “epidemic” of mortgage fraud and predicted that it would cause afinancial “crisis” if it were not stopped. Countrywide because the epicenter of this epidemic, which was allowed torage and cause the ongoing U.S. financial crisis and the Great Recession.  On the first trading day (September 6, 2004)after the FBI’s testimony gave B of A’s managers (particularly Lewis andMoynihan) ample notice of the risk of endemic mortgage fraud, the closing pricefor B of A shares was $43.61.  From thatdate, B of A stock lost slightly over 85% of its value because of Lewis andMoynihan’s leadership. On May 24, 2006, the Mortgage Bankers Association (MBA)got around to sending to each of its members the 8th Periodic Report(dated April 2006) of its anti-fraud specialist contractor (MARI).  MARI reported that stated income loans were“an open invitation to fraudsters,” had a fraud incidence of “90 percent,” andthat “the stated income loan deserves the nickname used by many in theindustry, the ‘liar’s loan.’”  On the daythe MBA warned each of its members of this endemic fraud B of A’s stock priceclosed at $48.48.  The current stockprice represents nearly an 88% loss from May 24, 2006. 

These stock prices and percentage losses come from B of A’s site.  B of A, according to its most recent financial report, has 10.13 billionshares outstanding.  Using that figure,the loss to B of A’s shareholders from the three dates I have discussed (the2004 FBI warning, the 2006 MBA/MARI warning, and the date on which Moynihan wasappointed CEO) to the most recent close was, respectively, over $426 billion,$480 billion, and  $103 billion.  (See this source for shares outstanding.)

In plainer English, B of A’s CEOs have led the bank in amanner that has wiped out around 90% of the shareholders value – a loss ofnearly a half trillion dollars.  Lewisleft B of A as a wealthy man despite destroying shareholder wealth at aprodigious rate.  Moynihan is being madeever wealthier despite continuing that destruction of shareholder value. 

Worse, the destruction was avoidable.  It was ego, incompetence, and moral blindnessthat caused Lewis to acquire Countrywide and Merrill Lynch.  Both were notorious – before B of A acquiredthem – for their suicidal lending and investing.  It was Moynihan’s incompetence and moralblindness that allowed B of A to commit tens of thousands of felonies in thecourse of foreclosing through perjury on those who were often the victims ofCountrywide’s underlying fraudulent mortgages. Moynihan and Lewis are fitting leaders of the 1% (actually the top0.0001%). 

Don’tforget about Hans-Olaf Henkel – B of A’s Racist Adviser for Germany

On February 6, 2010 I sent“AnOpen Letter to Dr. Walter E. Massey Chairman,Bank of America President, emeritus, Morehouse College” regarding “Hans-OlafHenkel, Bank of America’s Senior Advisor in Germany.”  I have never received a response to thisletter, though Randy Wray and I did receive a response from a B of Arepresentative to another article we did on B of A’s foreclosure fraud.  I am not aware of any U.S. reporter followingup on the points I made in that letter. My web search indicates that Herr Henkel is still B of A’s senior Germanadviser.  Few Americans know HerrHenkel.  He is the most prominentbusiness elite in Germany and perhaps all of Europe.  His racist views, which I note below, arewell known to B of A’s senior officials throughout Europe.

Here are the two takeawayson B of A’s choice of senior advisers. He blames the U.S. economic crisis on the end of “redlining” – making itillegal to discriminate against blacks in housing finance.  Henkel’s open racism and embrace of fantasyabout the causes of the U.S. crisis instead of facts demonstrates the kind ofadvice B of A is receiving. 

Henkel also explicitlyembraced (using a German phrase meaning “without any quibble”), the followingbigoted rants Dr. Sarrazin (then a member of Germany’s central bank):    

DrThilo Sarrazin, a member of the executive board and head of the bank’s riskcontrol operations, told Europe’s culture magazine Lettre International thatTurks with low IQs and poor child-rearing practices were “conqueringGermany” by breeding two or three times as fast.

A large number of Arabs andTurks in this city, whose number has grown through bad policies, have noproductive function other than as fruit and vegetable vendors.
 Forty per cent of all birthsoccur in the underclasses. Our educated population is becoming stupider fromgeneration to generation. What’s more, they cultivate an aggressive andatavistic mentality. It’s a scandal that Turkish boys won’t listen to femaleteachers because that is what their culture tells them. 

I’drather have East European Jews with an IQ that is 15pc higher than the Germanpopulation. 

It is an obscenity that abank that was formed to loan money to small, immigrant entrepreneurs of anoften hated religion (Catholicism), particularly Italian “fruit and vegetablevendors” is now choosing as its “senior adviser” in Germany a man who embracesthe vilest hates and lies that caused so much world misery.  Of course, this is modern German racismvariant in which Turks are so bad that even Jews (G-D forbid!) are preferable.

Here is how I ended my openletter:

Mr.Henkel is not simply a bigot.  Hissubstantive policy advice – deregulation and far higher executive compensation– makes him one of the principal German architects of the crisis.  He gave Bank of America awful advice. 

ButMr. Henkel’s saddest trait is hypocrisy. He is a serial hypocrite because his bigotry trumps the things hepurports to stand for.  His speakerbureau bio (self) describes him as “courageous.”  (He applauds Mr. Sarrazin’s screed asexemplifying courage.)  In the policycontext, courage is speaking truth to power when power does not want to hearthose truths.  Mr. Henkel flatters powerthrough the gospel of Social Darwinism. Mr. Henkel claims to be the champion of the “entrepreneur” – but treats“fruit and vegetable” entrepreneurs with contempt.  Mr. Henkel denounces “smears” against the“market system” but launches, and cheers, the vilest smears that have producedthe most monstrous crimes against humanity in world history.

Bankof America must not simply announce some face saving retirement (particularlyone thanking him for his service and paying him severance).  Bank of America needs to make a clearstatement about what it stands for.  DoesMr. Giannini or Mr. Henkel represent Bank of America?

Ioffer the following recommendations for your board’s consideration.  Mr. Henkel should be terminated for cause.  Immediately. Bank of America should review all policy advice it has received from himand his team and seek outside guidance from experts that (1) foresaw thecrisis, and (2) are not bigots.  Bank ofAmerica should review why its senior managers in Europe and the United Statestook no action while its “senior advisor” spread his hate for months.  Bank of America should announce a new $10million scholarship program for college and graduate students of limited financialmeans.  I suggest naming the program theGiannini awards. 

Given B of A’s failure totake any timely action even after my open letter made clear the urgent need toget rid of Henkel, I now urge B of A to fund the Giannini awards at a level of$100 million annually.  (That’s abouthalf the aggregate compensation B of A paid Ken Lewis for destroying hundredsof billions of dollars in shareholder value and ruining the lives of millionsof defrauded home borrowers.)

I urge the protestorsoccupying Wall Street and other financial centers to demand that B of A fireits racist-in-chief adviser, help the homeowners it defrauded, and stop allforeclosure fraud.  I ask businessreporters to rediscover their canines. Get a good grip, don’t let go, and tear into the real “mobs” that areattacking the American economy – the accounting control frauds likeCountrywide. 

Bill Black is an Associate Professor of Economics and Law atthe University of Missouri-Kansas City. He is a white-collar criminologist, a former financial regulator, andthe author of The Best Way to Rob a Bankis to Own One.  He can now befollowed on Twitter:  @WilliamKBlack