The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren\u2019t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn\u2019t believe regulatory approval is needed, said people with knowledge of its position.<\/p>\n
Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.<\/p>\n
\u201cThe concern is that there is always an enormous temptation to dump the losers on the insured institution,\u201d said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. \u201cWe should have fairly tight restrictions on that.\u201d<\/p>\n
Moody\u2019s Investors Service downgraded Bank of America\u2019s long-term credit ratings Sept. 21, cutting both the holding company and the retail bank two notches apiece. The holding company fell to Baa1, the third-lowest investment-grade rank, from A2, while the retail bank declined to A2 from Aa3. <\/p>\n