BofA got 2nd top U.S. regulatory grade: documents

By Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp (BAC.N), which got a $45 billion government bailout and was ordered to raise $33.9 billion more capital, was awarded the second-highest rating by U.S. banking regulators for overall financial health, documents released on Thursday show.

Regulators assign confidential ratings that assess banks' capital adequacy, asset quality, management quality, earnings, liquidity and sensitivity to market risk. They are known as "Camels" ratings based on the first letters of the six factors, and go on a scale of 1 to 5, where 1 is highest.

Bank of America and its Bank of America NA banking unit were awarded "2" composite ratings, according to documents released by the House of Representatives Committee on Oversight and Government Reform.

One of the documents showing the ratings is dated May 29, three weeks after regulators ordered the Charlotte, North Carolina-based bank to raise $33.9 billion following a "stress test" of its ability to weather a deep recession. Bank of America said on Thursday it has more than built that buffer.

"They have a lower Camels rating than we would like to see given their size," said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "It suggests that regulators are taking a dim view of the bank's risk controls and management capability. That's pretty scary."

The House committee obtained the documents by subpoena in connection with Thursday's testimony by Fed Chairman Ben Bernanke over his pressure on Bank of America to complete its acquisition of Merrill Lynch & Co.

Banks with Camels ratings of 4 or 5 go on the Federal Deposit Insurance Corp's list of "problem" institutions. The ratings are usually kept confidential to avoid frightening customers and investors.

Last year, Wachovia Corp and Washington Mutual Inc (WAMUQ.PK) suffered runs on deposits before their businesses were taken over by healthier rivals Wells Fargo & Co (WFC.N) and JPMorgan Chase & Co (JPM.N), respectively.