did i just lose my free checking?

i have wamu AND bofa (don't ask) and as of yesterday, the thought of losing my money and my free checking crossed my mind. my roommates assured me that my measly checking and savings accounts will be fine and there is no need to worry about my money but my free checking might be goners.

HOWEVER. i can't help but wonder what the hell is going on out there in bank land. despite the fact that i have very little money, i still think it's important to know the gist of the situation. seven hundred billion what? fanny and freddy are pregnant? on again, off again, on again? will there be a freaking debate or what? (that's all i really care about)

and then just this morning my aunt came to the rescue with a succinct and clear explanation for yours truly. she is part of the corporate leadership council and the below information is NOT a joke, NOT political commentary, just plain language about what happened. read it and weep?

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Six-bullet Analysis of What Transpired in the Financial Sector

1. The first five years of this decade offered the best opportunities in the recorded history of the banking industry. From 2000 to 2005, in almost every region of the developed world, deposit and loan growth more than doubled while fee income rose even faster.

2. To seize that opportunity, banks intentionally did three things which unintentionally changed the fundamental business model of the financial sector:

• To capture share, banks spent extensively on distribution. After years of attempting to increase flexibility banks globally added 12 billion dollars of new fixed costs.
  
• Much of the growth was driven by an astonishing volume of property lending. To tap that opportunity, banks changed their view of risk from something managed to something created and sold.
  
• This transformation from Risk Managers to Risk Wholesalers fundamentally changed how banks got paid. Traditionally, banks earned money on risk management spreads. Risk wholesalers were paid one-time fees. By 2002, non-interest income had doubled to comprise two-thirds of total operating income.

3. Profits grew faster than ever before, but higher profits required higher risk.

• Profits grew faster during the first 6 years of this decade (13% Compound Annual Growth Rate (CAGR)) than they have ever before. The new business model — high fixed-cost risk wholesaling for a fee — meant that banking earned more than any other sector in the world.
  
• But that left one obvious question: If banks were leveraging new capital market vehicles to create risk, then who was managing risk? The answer was: no one.
  

4. Banks intended to pass on risk. But in real life, managing risk is the role of banks in the economy. In the first 18 months after this new model began to sour, reported profitability at US banks fell 98.5% in one year.

5. Recovery for banks will be difficult because:

• Most banks have far less annuity balance sheet income.
  
• Loans were made that would never previously have been considered. Banks ignored the people behind the "paper." As those people lose their homes, jobs, and businesses, banks will lose their trust.
  
• An emphasis on fee-taking (over long-term value creation) has eroded customer relationships.
  
• Even banks not involved in the crisis are held guilty by association. All banks must now rebuild trust and relationships internally and externally.
  

6. Four Activities are Essential for the Financial Sector to Stabilize and Rebuild

• Ensure a mutually beneficial exchange of value with customers: prepare for different risk profiles and demonstrate value beyond price to prospective customers.
  
• Deliver in "Moments of Truth" with Customers: Ensure your staff possesses the tools and skills to address customer concerns quickly and efficiently.
  
• Build enduring relationships with Customers: Win your own customers, and then those of your competitors.
  
• Foster enduring relationships with staff: Defend top performers aggressively while recognizing the opportunity to pick up talent displaced en masse.
  

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