Bove: Nothing Unusual About Fed's Request to BofA

By Features FOXBusiness

Blame the shorts for trouble at Bank of America, says banking analyst Dick Bove of Rochdale Securities.

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Todays Wall Street Journal reports Federal Reserve regulators are requesting that Bank of America (BAC) submit contingency plans if its financial condition worsens. The newspaper reports executives of the bank recently responded to the unusual request from the Federal Reserve with a list of options& 

Bove says there is nothing unusual about the request. The Federal Reserve has asked every major bank to submit plans. There has been an almost orchestrated program to continue to escalate stories driven toward the end that BofA is going to fail.

The Dodd-Frank Act does require major financial institutions to submit what regulators call living wills, contingency plans to unwind their companies in times of financial distress. But the living will rule has not yet been put in place according to regulators making Bank of America the first institution to comply.

Bove says the Wall Street Journal article attempts to make it appear as if Bank of America has been isolated by the Fed and that the Fed is attempting to determine the viability of the institution. 

The reality, however, is that under Dodd Frank, every major bank in the USA is now required to submit a plan to the Fed to indicate how they would disassemble their business in the likelihood that they might fail. Therefore the Fed has not separated out Bank of America for special consideration, it is doing this with every major bank in the country.

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Bove says Bank of America is a viable entity that is vastly underpriced. The shorts are making a fortune on this and the SEC who should be investigating these claims and assertions has been quiet.