The ripples of the financial crisis of 2008 are still extending into the largest financial institutions in the United States. On August 23rd, 2011, rumors swept Wall Street that Bank of America may be get pushed into an involuntarily, government-orchestrated rescue by its smaller rival JP Morgan Chase. Bank of America is defending itself against an endless barrage of multibillion-dollar lawsuits and government investigations concerning their alleged issuance of defective mortgage backed securities. BusinessWeek described Bank of America as having "the year from hell" as their stock price dropped from $13.34 a share to as low as $6 a share on August 23rd. .
Through August 2011, Bank Of America has paid $40 billion in mortgage claims and settlements, and an additional $30 billion from the disastrous Countrywide Financial acquisition. These losses have led experts to question the amount of capital on Bank of America's financial statements. The mortgage onslaught has investors worried that Bank of America might have to sell itself in desperation. Bank Of America has already sold assets to raise capital and downsize. Still it is the largest bank in the U.S. with $400 billion in cash and liquid investments, $2.3 trillion in assets, 285,000 employees, and 58 million customers. Bank Of America seems to encompass what economists call "too big to fail." .
The Great Depression initially led to the regulation of banks in the United States. These regulations led to more stability but impacted financial performance. Gradually, as the economy grew over the ensuing decades, legislation was passed to start deregulating the banks. The deregulation began with the passage of The Interstate Banking and Branch Efficiency Act ("IBBEA") of 1994, which allows banks to go across state lines and engage in bank mergers. In 1999, the Gramm-Leach-Bliley Act ("GLB") was passed which allows commercial banks, investment banks, securities firms, and insurance companies to consolidate and merge.
