Bank of America to Get Billions in U.S. Aid

[sabra]

Source: WSJ

Sides Finalizing Terms for Fresh Bailout Cash; Lender Told Treasury That Without Funds, It Couldn't Close Deal for Ailing Merrill


WASHINGTON -- The U.S. government is close to finalizing a deal that would give billions in additional aid to Bank of America Corp. to help it close its acquisition of Merrill Lynch & Co., according to people familiar with the situation.

Discussions over these funds began in mid-December when Bank of America approached the Treasury Department. The bank, already the recipient of $25 billion in committed federal rescue funds, said that it was unlikely to complete its Jan. 1 purchase of the ailing Wall Street securities firm because of Merrill's larger-than-expected losses in the fourth quarter, according to a person ...

Read more: http://online.wsj.com/article/SB123197132814683053.html?mod=wsjcrmain

[onehandle]

1. Worst bank in America. Let them go under. nt

[SOS]

4. From Michael Lewis: Let it Fail

"There are other things the Treasury might do when a major financial firm assumed to be “too big to fail” comes knocking, asking for free money. Here’s one: Let it fail.

Not as chaotically as Lehman Brothers was allowed to fail. If a failing firm is deemed “too big” for that honor, then it should be explicitly nationalized, both to limit its effect on other firms and to protect the guts of the system. Its shareholders should be wiped out, and its management replaced. Its valuable parts should be sold off as functioning businesses to the highest bidders — perhaps to some bank that was not swept up in the credit bubble. The rest should be liquidated, in calm markets. Do this and, for everyone except the firms that invented the mess, the pain will likely subside."

http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html

[redqueen]

8. Oh I love that. Thanks for posting it! (nt)

[OhioChick]

5. Agreed. n/t

[hughee99]

7. I don't think this is about them going under...

This is about them needing money to buy up Merrill Lynch.

[notesdev]

9. Bingo

Bank of America is being used as an instrument to consolidate other failing financials.

And the taxpayer takes it on the chin, again, for another bunch of big contributors to politicians.

[riverdale]

34. BofA donated $250K to Bush's inaugural party

It *used to* be my bank

[Acadia Blue]

24. Ditto

[dipsydoodle]

2. Throw us a crumb

x(

[CatholicEdHead]

3. Pigs at the trough

[JeanGrey]

6. This is MADNESS. lET THEM GO.

[bunnies]

10. Fuck them. Down with Bank of America.

I mean all the way down.

$6.00 to cash a payroll check drawn on their own bank. Those money grubbing PIGS rob people blind.

[bikebloke]

11. Bank of Corruptia

I used to work for them (unfortunately to eat and keep a roof over my head). They put a hundred dollar bounty on fee ideas. So all the kiss-ass employees made fee suggestions for about everything.

Meanwhile, they have an over abundance of non-working relatives and friends collecting pay checks and benefits.

Sink the bastards!

[Hepburn]

12. Fuck BofA....

...if ANY bank deserves to go under, those lying, stealing bullshiters do.

JMHO

BTW: I hate them! :grr:

[high density]

13. If it can't "close its acquisition" without help, then they shouldn't be doing it in the first place

DUH!

[slipslidingaway]

14. Government Guarantees for Bank of America to Be Between $100 Billion-$200 Billion, CNBC Has Learned

Source: CNBC

Just announced on CNBC

No link yet.

[DJ13]

15. We need to stop wasting money

Just nationalize the entire banking sector and use them as conduits for bailouts to other industries during the Bush depression.

[slipslidingaway]

27. Consolidating money and power into fewer hands :( n/t

[Auggie]

16. Since when is B of A in trouble?

They should be rolling in dough with the interest I pay.

[gratuitous]

20. They bought Countrywide and Merrill Lynch

And apparently, Merrill Lynch was even more worthless than anyone thought it was. So, it turns out the first $25 billion Bank of America got from TARP was just a token payment for the big score to come.

Boom, baby.

[Auggie]

21. Thank you... Gee, you think they knew what they were getting into...

Makes you wonder if this was all planned out in advanced -- months, or even years.

[gratuitous]

23. I hope I remember this

Because there is no shortage of folks who are willing to kick ordinary folks who got cross-wise with their personal economics in the last couple of years. Yeah, some people overextended, but a lot of them were cheated, had a run of bad luck, were victimized by other people's greed, or other outside-their-control circumstances that worked against them.

Bank of America, however, has a whole bunch of legal and financial professionals on the payroll to guard against getting taken for a ride. Who was the genius who signed off on the Merrill Lynch purchase without looking closely into it? Was he lied to? Or was B of A making a greed grab for some assets, figuring they could fob off the dross on the American people?

Any way it's sliced, though, it looks like we the taxpayers once again get to foot the bill for someone else's lavish party.

[Auggie]

25. I bet they made a grab for the assets

knowing the govt. would let them off the hook.

[customerserviceguy]

31. They piss money away like drunken sailors

They've offered me a free $25 if I opened a checking account with them, and kept $100 in it for three months. I wouldn't even be dealing with them, but they were the hidden bank behind AAA of New York offering me a balance transfer for a YEAR with zero interest. Talk about pissing money away!

And they paid a fortune for Merrill Lynch (the most crooked of the stockbrokers) after some firm got paid $20 million dollars to look over the deal on ONE WEEKEND before they hit the "buy it now" button.

No, drunken sailors make a lot more sense than these guys, come to think of it...

[Amonester]

35. They're not drunken sailors...

They're drunken brokers, which is a lot worse.

[OhioChick]

17. Ludicrous. n/t

[saigon68]

18. Disgusting ----I hope the hungry homeless at the Sal Army tonite

Appreciate what the govt is doing for them </sarcasm>

[slipslidingaway]

28. Yup, but of course nobody saw this coming...

:sarcasm:

[RedEarth]

19. "Time to Fire Ken Lewis of Bank of America"

By Barry Ritholtz - January 14th, 2009, 9:14PM Step right up to the bar here in Bailout Nation, 2009 version. Open 24 hours, we never close. No bailout too big, no investment/money pit too dumb. Yes folks, we can handle your bad assets, recapitalize your bank, no muss, no fuss. Yes, here in America, we cannot be bothered with things like plans and strategies and maximizing returns for taxpayers.That’s right, we avoid the planning, and pass the savings onto to you, the home viewer!

Really, how the hell did we ever win WWII?

~~~

So the horrific deal Citibank cut with Treasury was a blueprint, an example for the next foolish investment — and here it is: Bank America, a supposed good bank, that couldn’t wait to get their hands on Merrill Lynch, now a bad bank.

And now that we all see what a terrible decision that was by supposedly sophisticated private sector players, well, then rather than take the hit, BoA has their grubby hands out begging for some taxpayer loot to paper over their idiotic decision-making. First they bought that giant manure pile CountryWide, and now they own another stinking pile of enzyme-free donkey-fazoo, Merrill Lynch.

I say, fuck ‘em. Why do I have to pay for their bad judgment?

Enough already! Fire Ken Lewis, he’s a bum. He’s made several horrific acquisitions, and needs to serve up his head on a platter for his god-awful lack of judgment. Toss out the entire Board of Directors, too, as they all suck. They’ve bankrupted the company, its time they all need to go.

Making matters even worse, this shitpile has been building up since last month. The WSJ reports:

The U.S. government has agreed to commit billions in additional aid to Bank of America Corp. to help the nation’s largest bank by assets close its acquisition of Merrill Lynch & Co., according to people familiar with the situation. Discussions over these funds began in mid-December when Bank of America approached the Treasury Department. The bank, already the recipient of $25 billion in committed federal rescue funds, said that it was unlikely to complete its purchase of the ailing Wall Street securities firm because of Merrill’s larger-than-expected losses in the fourth quarter, according to a person familiar with the talks.

Hey Lewis, you bought it, its yours, leave us out of your mess!

Don’t look now, but here comes the year’s most overused phrase: systemic risk:

“Treasury, concerned the deal’s failure could affect the stability of U.S. financial markets, agreed to work with the Charlotte, N.C., lender on the “formulation of a plan” that includes new capital from the $700 billion Troubled Asset Relief Program, according to the person familiar with the talks. The terms are still being finalized, this person said. Details are expected to be announced with Bank of America’s fourth-quarter earnings, due out Jan. 20.

Any possible arrangement might protect Bank of America from losses on Merrill’s bad assets. There would be a cap on the amount of losses the bank would have to absorb, with the federal government being on the hook for the remainder, said one person familiar with the matter.”

What a joke this has become. Are we supposed to be somehow comforted that the Federal Reserve and the Federal Deposit Insurance Corp., alongside the Treasury, are involved in the negotiations? They do not seem to have clue.

Time for an orderly liquidation: Start with Citi, move on to BofA, fire the execs, toss the Board, spin out the assets to competent managers who now how to manage risk and avoid excess leverage.

ENOUGH ALREADY ~!

http://www.ritholtz.com/blog/2009/01/time-to-fire-ken-lewis-of-bank-of-america/

[slipslidingaway]

29. Thanks for posting, so glad these deals are made behind closed

doors.

:(

[slipslidingaway]

26. Link to story

http://www.cnbc.com/id/28678006

Steve Liesman
CNBC Senior Economics Reporter

"Government officials are discussing a new aid package for Bank of America that would be similiar to the financial lifeline given to Citigroup in November, CNBC has learned. The Citigroup rescue involved both a fresh capital infusion and government backing of billions in risky assets held by the bank...

While the size of the added capital injection isn't known, the government is considering guaranteeing between $100 billion and $200 billion of Bank of America's risky debt, sources said. The guarantee would invlove the Federal Reserve and the FDIC along with the Treasury, these sources said...

Bank of America's perceived need for government aid raised questions about whether Chief Executive Kenneth Lewis overreached by swallowing Merrill and Countrywide Financial Corp, the largest U.S. mortgage lender, which the bank bought in July.

Those acquisitions propelled Bank of America into becoming the largest U.S. bank, with tentacles throughout the financial system just as the economy was heading south..."

[EconomicLiberal]

22. No more capital infusions! Nationalize them!

[NeoConsSuck]

30. Unfortunately, it looks like Obama signed off on this

The source told Reuters on Thursday that Bank of America will announce the government deal on Tuesday, when it reports earnings, and that the deal is structured to help Bank of America absorb the credit losses at Merrill Lynch & Co, which it bought on January 1.

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

http://finance.yahoo.com/news/BofA-in-talks-for-15-billion-rb-14075353.html

Well, it looks like the banking system *still* owns our government.

[ProgressIn2008]

32. This is hardly surprising. Of course both Bush and Obama signed off. nt

[classysassy]

33. Greed

is one of the things that will help destroy this country,if we the people don't reign in the greed merchants.