Is this the 'beginning of the end'?  Is it true what some of the nation's leading banking law professors are saying - that Bank of America is too big to be either governed or regulated? Today, Public Citizen, a self-described "public interest nonprofit organization representing more than 250,000 members and supporters nationwide, petitioned "the Board of Governors of the Federal Reserve System and the the Financial Stability Oversight Council ("Council") to [wake up to the fact that] Bank of America Corporation is a 'grave threat' to the stability of the United States financial system." The petition further requests these government bodies to "mitigate that threat" by the authorities granted them under the Dodd-Frank Reform Act.  By mitigate, ... they mean to "reform Bank of America into one or more institutions that are smaller, less interconnected, less complex, more manageable and, as a result, less systematically dangerous." - i.e., the breakup of BofA. Authors, Signers of the Petition. The 25-pp petition is signed and respectfully submitted by Micah Hauptman and David Arkush.  Click on Citizenvox.org for more info about Public Citizens.

Huffington Post presents this short bio on Micah Hauptman. Mr. Hauptman works in Washington, D.C. as the Financial Campaign Coordinator for Public Citizen's Congress Watch division.  As the Financial Campaign Coordinator, he works to collaborate with scholars from the Levy Institute of Bard College where their writing impacts the U.S. financial reform policy process. Public Citizen is a national nonprofit with over 225,000 members and supporters.  Congress Watch engages in legislative advocacy, strategic research, and grassroots organizing on a range of issues including financial reform, money in politics, access to justice, and consumer, worker, and environmental protection. Prior to joining Public Citizen, Micah worked as a prosecutor in Los Angeles, California. He received a B.A. from U.C.L.A. and J.D. from Pacific McGeorge School of Law.

What The Petition Seeks. The Petition was sent to Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke who serve as the Council's chairman and vice chairman, respectively.  They are being urged to split-up the bank, in a manner somewhat reminiscent of the breakup of AT&T 3 decades ago. Stephen Lubben, who chairs corporate governance and business ethics at Seton Hall School of Law and writes regularly on Dealbook, thinks it's unlikely the administration would forcibly break-up Bank of America - it would be exactly the kind of bold move on financial regulation that we have not seen at all from the Obama administration.  However, he admits the petition has a point.

BofA is a behemoth, and if it were ever necessary to unwind it, I think we have to assume it would be something of a disaster, the FDIC's fondness for its new orderly liquidation authority notwithstanding.

e.g., Lehman Brothers reported assets of $713 billion while it filed for bankruptcy in September 2008.  Bank of Americ reported $2.3 trillion in assets at the end of 2010. It thus would be by far the biggest bankruptcy ever.

And compared with the collapse of MF Global, which so far has been a problem, BofA's broker-dealer units hold more than $2.2 trillion in client assets. The bank reports that in the U.S. alone it has more than 57 million consumer and small-business banking relationships, and holds more than $1 trillion in banking deposits.

The bank’s chief executive, Brian T. Moynihan, might welcome a break-up, at least in part (and no doubt privately).  For one thing, he has already expressed a desire to return to the bank’s “core” business.  And there is still the lingering possibility that he might cleave off the mortgage lender Countrywide Financial into a bankruptcy process, messy though that would be.

To be sure, ditching some underperforming units is not quite the same thing as downsizing the bank, but there are certainly some at BofA who would be happy to see a break-up - starting with Merrill Lynch traders and brokers, who apparently have just been told to expect a 25% cut in their compensation.

While all the big (former) investment banks face real challenges fitting their business models to a post-Dodd-Frank, Volcker rule world, at least Morgan Stanley and Goldman Sachs do not have to face that challenge with the millstone of seemingly never-ending mortgage litigation around their necks, too.

For further details and to access a copy of the Petition, go to:   [Dealbook, 1/25/12].