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.JlLRES.

BOARD OF 3OVERNORS

OF TH

FEDERAL RESERVE SYSTEM

WASHINGTON, 0. C. 20551

Gregory A. Baer, Esq.

Deputy General Counsel

Bank of America Corporation

730 15th Street, NW

Washington, D.C. 20005

Dear Mr. Baer:

ADDRESS OFFCAL CORRESPONDENCE

TO THE BOARD

April 24, 2007

This letter concerns the notice filed January 29, 2007, under

section 4 of the Bank Holding Company Act ("BHC Act") by Bank of America

Corporation ("Bank of America"), Charlotte, North Carolina, to engage on a

limited basis in physical commodity trading activities ("Commodity Trading

Activities").'

Bank of America states in the notice that it currently engages

principally through its subsidiary, Bank of America, N.A. ("BANA"), Charlotte,

North Carolina, in commodity derivative activities that are permissible for bank

holding companies under the BHC Act ("Commodity Derivatives Activities").

These activities include trading in cash-settled swaps, forwards, options, and

other derivatives based on commodities.2 Bank of America has requested

approval to expand its current trading activities to include engaging in

physically settled commodity derivatives, taking or making delivery of

commodities in settlement of those derivatives, taking inventory positions in

physical commodities, and trading activities in the spot market in physical

commodities.

Bank of America would engage in Commodity Trading Activities through a

wholly owned subsidiary, Bank of America Commodities, Inc. ("BACI"),

New York, New York.

2 12 CFR 225.28(b)(8)(ii).
2

The Board has previously determined that taking and making

delivery of a physical commodity complements the financial activity of

engaging regularly as principal in Commodity Derivatives Activities based on

that commodity pursuant to Regulation Y.3 The Board has delegated to the

Director of the Division of Banking Supervision and Regulation, with the

concurrence of the General Counsel, the authority to approve requests by

financial holding companies to engage in Commodity Trading Activities as an

activity that is complementary to Commodity Derivatives Activities, if the

proposal meets the conditions imposed by the Board when approving previous

requests to engage in Commodity Trading Activities and does not raise

significant legal, policy, or supervisory issues.

In evaluating the risks posed by the proposal, the Director and the

General Counsel have considered that Bank of America already incurs the price

risk of commodities through its Commodity Derivatives Activities. Permitting

Bank of America to engage in the limited amount and types of physical

commodity trading activities described above, within the limits described in the

appendix to this letter, would not appear to increase significantly its potential

exposure to commodity price risk. To minimize potential increased risks

associated with the Commodity Trading Activities (including, but not limited to,

storage, transportation, legal, and environmental risks), Bank of America has

committed to the Board that it will not (1) own, operate, or invest in facilities for

the extraction, transportation, storage, or distribution of commodities; or

(ii) process, refine, store, or otherwise alter a physical commodity itself. Bank

of America has further committed to the Board that it will limit the aggregate

market value of physical commodities that it and any of its subsidiaries hold at

any one time to 5 percent of Bank of America's tier 1 capital. Bank of America

also has established and maintained policies and systems for monitoring and

controlling the risks associated with the Commodity Trading Activities. Going

See 12 CFR 225.28(b)(8)(ii); Board letters dated March 27, 2007, regarding

Credit Suisse Group, September 29, 2006, regarding Fortis S.A./N.V., and

April 13, 2006, regarding Wachovia Corporation; Société Générale, 92 Federal

Reserve Bulletin Cl 13 (2006); Deutsche Bank AG, 92 Federal Reserve Bulletin

C54 (2006); JPMorgan Chase & Co., 92 Federal Reserve Bulletin C57 (2006);

Barclays Bank PLC, 90 Federal Reserve Bulletin 511(2004); LIBS AG,

90 Federal Reserve Bulletin 215 (2004); and Citigroup Inc., 89 Federal Reserve

Bulletin 508 (2003).
3

forward, Bank of America is expected to continue to maintain effective

risk-management policies and systems pertaining to its Commodity Trading

Activities. Approval of the proposal would likely benefit Bank of America's

customers by enhancing its ability to provide efficiently a full range of

commodity-related services and improving its understanding of the commodity

markets.

Based on the record, including all the commitments made to the

Board in connection with the notice and the conditions imposed by the Board in

previous cases, the Director, with the concurrence of the General Counsel, has

determined that the proposed Commodity Trading Activities are complementary

to the Commodities Derivatives Activities conducted by Bank of America; that

the proposal would not appear to pose a substantial risk to Bank of America,

depository institutions operated by Bank of America, or the financial system

generally; and that the proposal can reasonably be expected to produce benefits

to the public that outweigh any potential adverse effects.

In making these determinations, the Director and the General

Counsel relied on all the information, representations, and commitments

provided by Bank of America to the Board in connection with the notice and, in

particular, the commitments set forth in the appendix to this letter and those

conditions contained in the Board's previous decisions noted above regarding

these activities. These commitments and conditions are critical to the

determination that the Commodity Trading Activities would not pose a

substantial risk to the safety and soundness of Bank of America, other financial

institutions, or the financial system generally. These commitments and

conditions are deemed to be conditions imposed in writing by the Board in

connection with the notice and this approval and, as such, may be enforced in

proceedings under applicable law.

This approval is specifically conditioned on Bank of America's

compliance with all the commitments made to the Board in connection with the

proposal, including those set forth in the appendix. This determination is also

subject to all the conditions set forth in Regulation Y, including those in

section 225.7, to the conditions contained in the Board's previous decisions

noted above regarding these activities, and to the Board's authority to require

12CFR225.7.
4

modification or termination of the activities of a bank holding company or any

of its subsidiaries as the Board finds necessary to ensure compliance with, or to

prevent evasion of, the provisions and purposes of the BHC Act and the Board's

regulations and orders issued thereunder.

Sincerely yours,

Robert deV. Frierson

Deputy Secretary of the Board

Appendix

cc: Federal Reserve Bank of Richmond
5

Appendix

Commitments

1. Bank of America commits to the Board of Governors of the Federal Reserve

System ("Board") that it will limit the aggregate market value of physical

commodities that it and any of its subsidiaries hold at any one time as a result of

the Commodity Trading Activities to 5 percent of Bank of America's

consolidated tier 1 capital. Bank of America will include in this 5 percent limit

the market value of any physical commodities it holds as a result of a failure of

reasonable efforts to avoid taking delivery in commodities transactions

conducted pursuant to section 225 .28(b)(8)(ii)(B) of Regulation Y. In addition,

Bank of America agrees to notify the Federal Reserve Bank of Richmond if the

aggregate market value of commodities held by it under the approval exceeds

4 percent of Bank of America's tier 1 capital.

2. Bank of America commits to the Board that it will take and make physical

delivery only of commodities for which derivative contracts have been

authorized for trading on U.S. futures exchanges by the Commodity Futures

Trading Commission (unless specifically excluded by the Board) or other

commodities that have been specifically authorized by the Board.

3. Bank of America commits to the Board that it will not own, invest in, or

operate facilities for the extraction, transportation, storage, or distribution of

commodities (except in satisfaction of debts previously contracted or in

connection with a non-performing loan, or where such investment is otherwise

permissible for a financial holding company).

4. Bank of America commits to the Board that it will not process, refine, or

otherwise alter a physical commodity itself. Bank of America will contract with

a third party for any services that are needed in connection with the handling of

any commodity.

5. Bank of America commits to the Board that it will not store or transport

physical commodities on its own but will only use storage and transportation

facilities owned and operated by third parties. Bank of America will enter into

service agreements only with accredited, reputable independent third-party

facilities.