Thread: Here Comes TARP 2: BOA Implodes, Bankruptcy Contemplated

Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated

Submitted by Tyler Durden
08/08/2011 11:30 -0400
Comments: 186

With Bank of America investors finally realizing it is game over for the company as a going concern, at this point there are just two options for Brian Moynihan: the spin off of CFC as a bad bank, backstopped by the Fed, or, well, Chapter 11, which for a bank is essentially liquidation (and with CDS trading up 50 bps to 260 a bankruptcy seems increasingly inevitable). It also means that another TARP is on the way. And once America realizes that another several trillion have to be put into its insolvent banking sector, it will get quite violent. The biggest irony: it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.



And the full AIG filing which just put the final stake through the heart of America's most insolvent bank:

AIG versus BAC 8-8-2011
http://www.docstoc.com/docs/88884809/AI ... C-8-8-2011

http://www.zerohedge.com/news/here-come ... ntemplated

Bank of America Defaults Risk Soars To Highest Since June 2009, Jumps By 10% Overnight

Submitted by Tyler Durden
08/08/2011 08:16 -0400
Comments: 55

Last week, when discussing the ongoing collapse in the house of cards that Ken Lewis built and which Brian Moynihan is helping bring down, we asked readers if they "Got Bank Of America CDS?" both in general, and in the aftermath of the disclosure that "New York AG Says BAC's $8.5 Billion Settlement Is "Unfair and Misleading"." We hope the answer was yes for most, as BAC CDS just jumped to the highest since June 2009, hitting 235 bps after exploding by almost 10% overnight. And with the stock now trading with a $7 handle, we are very much concerned TARP 2 is coming soon, only this time BAC will be formally split up, for no other reason than to spin Countrywide off and most likely see it end up with Fed funding. Wherein lies the rub: what will end up happening when BAC loses its TBTF status is that CDS referencing CFC will grind tighter to a spread pari with the US, while those referencing BAC (and/or MER) will initially tighten only to surge on the realization that BAC will have lost its government backstopped status (courtesy of the "conservatorship" of its most atrocious division).

And in other news, Goldmnan CDS was wider 17 to 183, Wells 10+ to 120 and MS 22.9 to 221.6. Risk is finally coming home to roost.

http://www.zerohedge.com/news/bank-amer ... -overnight

Bye-Bye you illegal alien lovers!









http://www.youtube.com/watch?v=ZarmRLa2p9Q