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This Seems Like a Good Idea

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After announcing its largest loss ever, Bank of America said this morning that it plans to reduce Basel III risk-weighted assets by $200 to $250 billion by the end of 2012 (slide 27). On BofA's call, Glenn Schorr of Nomura asked how that RWA reduction would affect revenues. Bruce Thompson didn't give an exact answer, but admitted that many of the businesses that will be cut back are money losers - calling out structured credit in particular - and implied that the revenue effect would be small or even positive:

I think if you look at and you saw the individual books, one of the most significant contributors to that reduction of $200 billion to $250 billion is actually something, over the last several quarters, that we've taken losses on. I think if you think about the structured credit trading book, that's not something where you see significant amounts of income on as well. So think -- the net of it is, while there is some income, there are also certain elements of that, that have been expensive. So we really don't see any material level of impact into the income statement from reducing that $200 billion to $250 billion.

Earnings Transcript [Seeking Alpha]