Bank of America Corporation (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) endangered

Bank of America and JPMorgan Chase & Co. apprehensive of Bernanke's report

In brief: Bank of America Corporation (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) may be badly hit if the Feds decide to raise interest rates at the week's end.

Now it’s all up to Bernanke’s speech. Bank of America Corporation (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) shares rise in price today, but can dramatically collapse due to interest rates rising by the Fed.

Raghuram Rajan warned the central banks in 2005 of a possible fiscal crisis, if they lose a spirit of mutual confidence. Now, former chief economist of the IMF indicates that the U.S. Fed may raise rates, as the U.S. 10% unemployment rate continues unabated. Interest rates near zero threaten to inflate asset market bubbles and keep afloat inefficient companies, according to Rajan and William White, former head of Bank for International Settlements (BIS) economic department. Following the debt crisis, U.S. Fed Chairman Ben Bernanke should raise the interest rate to at least 2%, Rajan said.

Dmitriy Srebnev
2010-08-23 16:28, Economics.

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