Bank of America hidden assets, internal documents revealed

August 31st, 2010 - this article is free to republish with open public license

The plot thickened on failed Kaupthing Bank’s restructuring when internal documents revealed a hoard of 40 billion Euro, held quietly for investors. The list of fund holders include big names like Bank of America, Deutsche Bank, Goldman Sachs, Credit Suisse, and Morgan Stanley. A wrap up committee for the bankruptcy notified them that they may now collect what they had left for safe keeping. This internal notice made it out into the public.

Kaupthing Bank nearly lost solvency during the regional melt down in Iceland, being taken over by the Icelandic Financial Supervisory Authority. One thing to note is that during the height of success and the housing bubble, it controlled a sum of 58 billion euro, nearly as much as was being held for the listed asset holders. The numbers suggest that half of Kaupthing’s value was propped up as a holding company by Bank of America and the larger players.

A small bank holding sums for the largest financial companies is a sign they are hedging their bets, it could mean that they are distributing money throughout a large number of smaller banks. One reason for this is stability, such as don’t put all your chips on the same bet. Another is to obfuscate the true amount of funds that a company possesses.

The auditing practices of different countries would mean that assets spread around many different systems and nationalities would be more difficult to audit, with the true total muddied. The banking industry is an interconnection web of organizations, which might or might not have discrete arrangements for the storage of funds.

Total Claims: 28167
Total Amount: 40 billion Euro


570 20100106-0953 Merrill Lynch International Bank Limited Afl. /Der. 3. 644. 126. 815 204. 244. 552 AF

    Still in business.

571 20100111-0001 Commerzbank AG. Skuldabr. /Bonds 3. 900.000.000 158.019 AF

    Using a variant of internet “elite” gaming community dialect when registering the company name.

572 20100106-1049 Bank of America, N. A. Lanasamn. /Loan Agr. 4. 373. 519. 236 168. 664. 922 AF

    Stock price is sliding.

581 20100109-0011 Seolabanki lslands Skuldabr. /Bonds 101. 281.006. 468

    An island paradise where the taxes are low, and campaign contributions as plentiful as coconuts.


Date August 31, 2010