Bank Of America Warned By U.S. Regulators It Must Get Stronger

U.S. regulators have informed Bank of America's (BAC.N) board that the company could face public enforcement action if they are not satisfied with recent steps taken to strengthen the bank, the Wall Street Journal said, citing people familiar with the situation.

BofA has been operating under a memorandum of understanding since May 2009. The memorandum, which is not public, identified governance, risk and liquidity management as problems that had to be fixed, the paper said, citing people familiar with the document.

In recent months, regulators met with BofA's board and said they wanted to see more progress on the bank's compliance with the memorandum, the Journal said.

In the absence of progress, the informal order could turn into a formal and public action, which would likely mean intensified scrutiny and greater restrictions, the paper said.

However, the newspaper said that BofA's directors believe the bank has met demands set out in the 2009 document.

Now, "the board's view is it's time to take us out of the penalty box," one person familiar with the situation told the Journal.

Bank of America spokesman Larry Di Rita declined to comment on the Journal report to Reuters.

(Reporting by Sakthi Prasad in Bangalore and Rick Rothacker in Charlotte, North Carolina; Editing by Muralikumar Anantharaman)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[mikeannett]

10:54 AM on 11/24/2011

Our past government gave the keys to the jail to the inmates and now they do NOT have the grapes to fix what they have done. It will effect the re-election contributions. Lets get real they all have to go

[tosc]

10:38 AM on 11/24/2011

BofA does not need to get stronger...they need to dissolve and serve their time in jail for not paying their debts...just like those in Kansas who have been placed in debtor's prison for unpaid debt! Debt is a module perpetuated by banks to derive revenue and it seems now that if you can't pay your debt BofA will have you jailed in those states that permit it! Yet BofA gets bailed out of their debt by the very people whose taxes rescued them in their time of need! WTH?

[TrutherUSA]

08:40 AM on 11/24/2011

It is simply time to break up the big banks and reinstate the Glass-Siegel Act. Since the government won’t break them up the public should do it themselves by switching to local banks and credit unions. As their customers leave them they will get smaller naturally and at some point they will sell off assets and become a manageable size, then they will no longer be a threat.

[jims1950]

08:00 AM on 11/24/2011

if there is a god....take this bank down NOW!!!!!

[mistykane]

08:39 AM on 11/24/2011

You must not know what would happen to not only the U.S. economy, but the global economy if our banking system fails. And the ones that would suffer the most are the poor and middle class!

[sf omega man]

12:08 AM on 11/24/2011

Time to move headquarters back to San Francisco.

[NOSOCIALNETS]

06:44 PM on 11/23/2011

Only when Ken Lewis in reduced to ashes.

[cybergirl2]

03:37 PM on 11/23/2011

Bank of America (BofA), like all of the other very large banks, simply needs to be broken up. Any organization with assets well over $1 trillion dollars, as is hte case with BofA should not be able to operate because of the concentration of risk if it is not adequately managed, and BofA was not adequately managed. I think one of the goals of OWS should be to demand that the government mandate that these super huge banks be broken up into a miimum of three banks each. This way we go form 20 banks to 60 banks or more. This will create a lot more jobs in the banking sector. Also, we need to bring back regulations on interest rates like Reg Q which would actually bring rates back up so that banks could actually make money from lending and not have to resort to capital markets and derivative markets trading in order to make money. Lending, when done correctly, is not as risky as trading activities and can be used to develop businesses and communities. This is how regulation and government input can be used effectively to help save the weakened banking industry which was over wrought with the wrong type of leadership and ideology. In the 1930s after banking laws and regulations were implemented and enforeced, worked really well for 80 years.

[Stephen F Norton]

01:24 AM on 11/24/2011

Right on! They should put the Glass Stiegel Act back in force. No bank should be allowed to grow to "too big to fail " size again. Your post is excellent.

[citizen of the universe]

03:04 PM on 11/23/2011

Bank of America is the zombie that won't die!

[kazama1994]

01:45 PM on 11/23/2011

Bank of America is one of the worst banks to bank with sure they have some benefits but they are bad with people and are just bad in general

[Stephen F Norton]

01:25 AM on 11/24/2011

I agree wholeheartedly.

[Both Wings 2 fly]

01:03 PM on 11/23/2011

These banks have that "too big to fail" thing going on. The tea party wants to have no regulations, on them and all other industries. Who benefits from all the deregulation that has taken place in the last thirty years? A few wealthy families, and individuals, have pushed for all of this, and our country has suffered. We were at our strongest, when there was a 90% tax on the wealthiest, regulations on how banks could operate, the news media all separated, how much corporations could give to politics.
Those Were the "good old days".
Sua Sponte

[Stephen F Norton]

01:31 AM on 11/24/2011

What you say is so true. They deregulated the Savings and Loans then crash. Tax payers stuck again. I believe Coolidge said something like "The problem with capitalists is they're greedy."
I never did get where giving all these breaks to a small proportion of the population was going to create all these jobs. Where do they create manufacturing jobs? China and India mostly. The other 98% consume more so giving them more breaks on taxes will create more jobs. But guess who has bought out both parties.......

[curiouslikeaKAT]

11:27 AM on 11/23/2011

Reuters, you tell us nothing, you ask no questions, you are no journalist. http://www.huffingtonpost.com/2011/11/22/bank-of-america-warned-by_n_1107270.html?ref=daily-brief?utm_source=DailyBrief&utm_campaign=112211&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Brief#

[Stephen F Norton]

01:33 AM on 11/24/2011

I'd sure like to see that memorandum of understanding. I don't see how they have the right to make it private as we tax payers are on the hook for their messes.

[labrown]

10:09 AM on 11/23/2011

"Must get stronger"??? Isn't that a little like telling a pig "you have got to fly"?

[CAMBEL]

07:33 AM on 11/23/2011

If stock holders EVER wised up and demanded to receive dividends again instead of just hoping the price goes up these banks couldn't get away with this.

The banks fooled them. If the profits went into dividends the stock holders would NEVER approve a CEO making 80 million dollars, because that is taking money away from the shareholders.

First they fooled the stockholders, now they declared war on their customers. They are about to go the way of ENRON, Woolworths, and every other company that stopped giving the customers what they wanted.

[labrown]

10:11 AM on 11/23/2011

Without all the smoke and mirrors provided by the Fed and all the back door bail out the book value of B of A and many others is less than nothing .... by many trillions of dollars at that.

[Shanta Gopaul]

06:10 AM on 11/23/2011

What gives these bank COO to get million dollar salaries. Guess you have to bribe the Board of Dir. One of these jerk salary can pay 10 workers who do the work

[labrown]

10:12 AM on 11/23/2011

Hey ... these guys have run their companies into bankruptcy and screwed the American public and much of Europe at the same time ... who wouldn't want to hang on to "talent" like that?

[Shanta Gopaul]

06:05 AM on 11/23/2011

As a realestate agent, I found that bank of America is very difficult to deal with regarding short sales. This bank appraisals come in high even though the homes are in poor condition. They rather foreclose.

[LizBankster]

09:50 AM on 11/23/2011

appraisals were overly inflated to begin with; BofA doesn't want get off that "gravy train" as shown in their loan mods, foreclosure policy.

[labrown]

10:14 AM on 11/23/2011

I am an agent too and I can tell you THEY ARE ONLY IN THE FORECLOSURE BUSINESS. This is NOT "your Father's bank". They engineered this economy and now they are doing exactly what they brought prices to their knees to do, grabbing the land". The only fly in their ointment is they really believed they could get away with selling the notes and then still claiming to own them and when they realized they had tripped over their own ****, they forged new notes with phony signatures and notaries and got caught.

[knosum]

11:26 AM on 11/23/2011

And they should be in prison for that.

[Lesley Anne]

04:13 PM on 11/23/2011

Yes, but the Dept. of Justice still wants to give them a sweetheart deal. Fortunately, state attys general are not blindly going along with it. They are pressing for more accountability. We need a new leader at the justice department by the way.