Feds release portion of Bank of America's 'living will'

12:09 PM, Jul 5, 2012   |    comments
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ATLANTA -- Should Bank of America be deemed insolvent or otherwise fail, the company says it would place its U.S. banking operations into FDIC receivership, unwind its Merrill Lynch unit by putting it under a government-appointed trustee and place its non-bank and non-broker holding companies into Chapter 11 bankruptcy.

A bridge bank would be created so some surviving operations could eventually be spun out again as an independent company.

The details were disclosed in a 42-page document released to the public Tuesday by the Federal Deposit Insurance Corp. and the Federal Reserve . The document, on BofA letterhead, is a section of a much larger file turned over to regulators Monday.

It's part of the so-called living wills that large, systemically important banks are now required to update annually. They advise regulators on how the bank is constructed and suggest ways to peacefully dismantle the company. The process is required by the Dodd-Frank financial reforms and was designed to prevent taxpayers from bailing out banks with large handouts in the event of a crisis.

The public portion of the plan reads mostly like an annual report, detailing the various businesses BofA participates in and how each affects its balance sheet. There isn't much new information for investors to glean.

Should BofA face failure, it intends to use existing government bankruptcy and deposit insurance programs to unwind. Overall, the public disclosure gives only a high-level glimpse into the living will.

(Atlanta Business Chronicle)

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