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  1. #1
    Senior Member carolinamtnwoman's Avatar
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    BOA Threatens Fed, Demands More Cash From Taxpayers

    Bank of America Threatens Fed, Demands More Cash From Taxpayers


    by Mike "Mish" Shedlock

    Global Research, January 16, 2009
    globaleconomicanalysis.blogspot.com


    Bank of America fell a whopping 18.43% today, hitting a new 52 week intraday low of $7.35 on concerns it is not going to easily be able to digest the merger with Merrill Lynch. I suggest Bank of America has easily bitten off more than it can chew and said so at the time, on September 15, 2008 in Market Votes "No Confidence" In Merrill, Bank of America Merger.


    Bank of America (BAC) was hammered a whopping 21% for its ridiculous offer for Merrill Lynch (MER). Clearly the market thinks Bank of America overpaid and so do I. Merrill Lynch which gapped up to $21 (the offer was for $29), gave every penny of it back and closed at $17.06. It is highly likely that Merrill Lynch would have fallen to $14 or $15 (if not a lot more) in the wake of the bankruptcy of Lehman (LEH).

    CEO Lewis had to know that, and he had to know there would be enormous pressure on Merrill to do something today if only he waited one day. If he did not know that, then Lewis is incompetent.

    By the way, there is one other possible explanation for this foolishness: Lewis was in a mad rush to enhance his Ego. This merger (if it goes through) would create a behemoth that would rival Citigroup (C) in terms of assets under management. Lewis, in an impatient state did not care what he paid to achieve that fame.

    The action in Bank of America (BAC) today is a stern warning to JPMorgan (JPM) to not get cute and buy Washington Mutual (WM) even though that is exactly what the Fed would like to see.

    The moral of this story is: The strong swallow the weak until the strong become weak.

    What Really Happened With That Offer?

    Assuming for a second that Lewis had his mental capabilities with him at the time, there is yet another explanation for that ridiculous offer. Please consider Another Shotgun Marriage: Bank of America and Merrill Lynch.

    Bank of America (BAC) agreed to pay $44 billion for a company that would have been worth $18 billion on Monday's open, assuming a $5 markdown on Monday to $12. Why?

    I sense a shotgun wedding sponsored at gunpoint by the Fed.

    A shotgun wedding at a purposely ridiculous price with an agreement from the Fed to pick up the pieces later if necessary sounds just like what the doctor ordered. Of course it could be pure incompetence by Lewis, or a pure gamble by Lewis that the Fed (taxpayers) would pick up the pieces if it all came crashing down.

    One point to remember is that the Fed is desperate to buy time. The Fed seems willing to lie, threaten, postpone, and usurp authority to buy that time. Time is up for this maneuver.

    Bank of America Threatens The Fed

    Please consider BofA in talks for $15 billion capital plus guarantees.

    Bank of America Corp is in talks with the U.S. government to receive about $15 billion in additional capital from the Treasury Department's Troubled Asset Relief Program, plus government guarantees, according to a financial policy source familiar with the talks.

    President-elect Barack Obama and President George W. Bush have both signed off on additional aid for Bank of America, the source said.

    Bank of America has already received $25 billion of TARP money. The source said Bank of America has threatened to walk away from the Merrill deal if it did not receive more government aid.

    More Details

    Bloomberg has additional details of the taxpayer ripoff in Bank of America May Get U.S. Aid for Merrill Lynch.

    Bank of America Corp., the biggest U.S. bank by assets, may get more aid from the government to help absorb losses tied to this month's acquisition of Merrill Lynch & Co., three people familiar with the matter said.

    Details are likely to be disclosed on Jan. 20, the people said. That's when Bank of America may post its first quarterly loss in 17 years as it digests the purchases of Merrill Lynch and Countrywide Financial Corp. The combined company has already received $25 billion from the U.S.

    Bank of America, based in Charlotte, North Carolina, told regulators in December the takeover might be abandoned because of Merrill's worse-than-expected results, said the people, who declined to be identified because the talks are private. The government insisted the transaction proceed because its collapse would create new turmoil in the financial system, they said.

    “Bank of America has all kinds of problems with its acquisitions,â€

  2. #2
    Senior Member koobster's Avatar
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    its pretty sick that the American taxpayers are getting stuck with all these bailouts, what about the Har working American taxpayers who are losing their job and homes
    Proud to be an AMERICAN

  3. #3
    Senior Member AirborneSapper7's Avatar
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    "Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism."
    Couldnt have said it any better... We are in a world of hurt, brought about by the corruption in DC
    Join our efforts to Secure America's Borders and End Illegal Immigration by Joining ALIPAC's E-Mail Alerts network (CLICK HERE)

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