by Calculated Risk on 7/16/2009 12:24:00 AM

From the WSJ: U.S. Regulators to BofA: Obey or Else

Bank of America Corp. is operating under a secret regulatory sanction ... the so-called memorandum of understanding gives banks a chance to work out their problems ...

Citigroup Inc. has been operating since last year under a similar order with the Office of the Comptroller of the Currency...

In a letter that was reviewed by The Wall Street Journal, the Fed criticized Bank of America's management and directors for being "overly optimistic" about risk and capital. The bank's capital position "was vulnerable" even before the Merrill deal, the Fed concluded, citing "acquisition activity" that included last year's takeover of mortgage lender Countrywide Financial Corp.