how do you know it will be bad for the stockholders? this isn't AIG we're talking about here, the situation is different. BAC is in a better negotiating position than AIG was
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Bac
- Thread starter bond_trad3r
- Start date
In my opinion BAC is the strongest bank out there, so if they're not a bargain at 8 bucks, then the world is really on the brink of disaster. If you're going longer term, I think BAC would be a very good bet at this price, hey Warren Buffett got in in the 30s I believe.
Briefing had a story last night about the government possibly backing $100-$125 billion in assets for BAC. After midnight, DJ broke a story about $20 billion in fresh capital, but there was also a headline that read 'US to backstop $118 billion in BAC assets.' So I would assume that it's the $118 billion (not the $20 billion) number we're comparing to the $100-$125 billion that was expected?
Quote from belmondo:
how this is possible? CEO first acquire Countrywide and than MER. really cleaver decisions and now is begging for taxpayer money.
As I understand it, MER's assets deteriorated much more than BAC expected, and BAC was threatening to back out of the deal. Thus the government felt it had to do something to prevent another LEH-style credit market freeze-up with LIBOR shooting through the roof again. Or something to that effect.
Quote from Toonces:
Briefing had a story last night about the government possibly backing $100-$125 billion in assets for BAC. After midnight, DJ broke a story about $20 billion in fresh capital, but there was also a headline that read 'US to backstop $118 billion in BAC assets.' So I would assume that it's the $118 billion (not the $20 billion) number we're comparing to the $100-$125 billion that was expected?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZs1pLsWbonk&refer=home
$20 billion invested, plus $118 billion of assets guaranteed
term sheet at
http://www.ustreas.gov/press/releases/reports/011508bofatermsheet.pdf
some snippets:
Fee / warrants equity / dilution:
Institution will issue to USG (UST/FDIC)
(i) $4 billion of preferred stock with an 8% dividend rate (under terms described below); and
(ii) warrants with an aggregate
exercise value of 10% of the total amount of preferred issued. The fee may be adjusted, as necessary, based on
the results of an actuarial analysis of the final composition of the Pool, as required under section 102(c) of the Emergency Economic Stabilization Act of 2008.
loss sharing:
Institution absorbs all Eligible Losses in the Pool up to $10 billion.
USG (UST/FDIC) will share Eligible Losses in the Pool in excess of that amount, up to $10 billion. All Eligible Losses beyond the institutionâs deductible will be shared USG (90%) and institution (10%).
http://www.ustreas.gov/press/releases/reports/011508bofatermsheet.pdf
some snippets:
Fee / warrants equity / dilution:
Institution will issue to USG (UST/FDIC)
(i) $4 billion of preferred stock with an 8% dividend rate (under terms described below); and
(ii) warrants with an aggregate
exercise value of 10% of the total amount of preferred issued. The fee may be adjusted, as necessary, based on
the results of an actuarial analysis of the final composition of the Pool, as required under section 102(c) of the Emergency Economic Stabilization Act of 2008.
loss sharing:
Institution absorbs all Eligible Losses in the Pool up to $10 billion.
USG (UST/FDIC) will share Eligible Losses in the Pool in excess of that amount, up to $10 billion. All Eligible Losses beyond the institutionâs deductible will be shared USG (90%) and institution (10%).
So it says the derivatives portfolio has maximum potential future losses of $81 billion. Where can I find more detailed information about the contents of the derivatives portfolio?
Quote from matgallis:
they're getting billions from the government because it's NEEDED. Did you see the losses mer created? 15 billion! More to come guys! Run from bac, mer/countrywide will kill this bank
BOA isn't going away but it will be ahile before they clraw themselves out of this ditch