Why Is BOA Having Problems Now?

[Vendot]

http://www.bloomberg.com/avp/avp.htm...6NnD7iBDRo.asf

I remember some time ago people were talking about how if Bank of America went down, the whole world would collapse. Well its happening.

I dont hear any problems from most Asian banks, SBI (State Bank of India) or BOC (Bank of China) or Canadian banks or Australian banks. So why is that our western banks funded made themselves so vulnerable in this way.

The worlds largest banks are now having major issues. BOA, Citigroup, Deutsche Bank, UBS and others....... what the fucking is going down? Discuss.

[Ethersync]

They are hugely over leveraged. Simple as that. Many analysts think the only reason they bought Merril Lynch is so they would be "too big to fail" guaranteeing they would get a bail out...

[Vendot]

Man this is fucking major mess..... how can the US government bailout BOA & Citigroup now? More printing money?

What the fucking is going on? Which other big banks are on the ropes? (I mean apart from those MAMMOTH banks).

[_Richard_]

They are hugely over leveraged. Simple as that. Many analysts think the only reason they bought Merril Lynch is so they would be "too big to fail" guaranteeing they would get a bail out...

read something that says they're trying to get out of that buy, and the government is demanding that they buy it

for a bail out

[doridori]

i thoguht of BOA the korean singer.

[AsianDivaGirlsWebDude]

They heard the gooberment was giving away teh moneys...

ADG

[Snake Doctor]

They need the 2nd $350 billion in gubment cheese

[Kimmykim]

BofA isn't in trouble... in December they told the Fed that they wouldn't be able to complete the Merrill purchase without some help. At that point, they weren't told yes or no, but they went ahead with the sale -- instead of waiting until it turned into a Morgan/Bear Stearns deal where the Fed backed the debt in order to make the deal.
More than likely there will be a slight dilution in the stock value to shareholders as the deal is completed, but nothing major, relative to the fair market value price that Morningstar or others put on the stock.
I doubt their 5 star rating goes down either.

[qxm]

i thoguht of BOA the korean singer.

yeah... I like them songs

But going back to the original question this is whut happened.... there was a real estate bubble so fucking big and crazy that people with no job (no doc) and no ability to read (no shit) .... were given loans.... mostly ARMS and in most cases cute lil ARMs with a balloon payment in the end ... brokers were making a killing out of giving these loans cause there was lil regulation so I could tell people I was going to charge them 1 point go get them wet.. then at the closing I'd tell them THE BANK was going to charge them 4 points but it was still a great deal.

Brokers got this shit memorized by heart and they were getting 4 points up front and in many cases with banks such as NEW CENTURY MORTGAGE.. (one of the first to go down) .. you could get a rebate and a bonus point that the bank would give you .. .It didn't matter if the loans were shit or "subprime" as they were called....

Well seeing as tho as the refis and purchases were going wild because prices were being inflated .... the banks got GREEDY ... yes ... thats the reason this shit is going on... the bubble was unsustainable and they didn't think about it nor they gave a fuck .. they just wanted in! ... and now that shit hit the fan you can see what banks got greedy and where their investments were..... bundled up crap mortgages and fucked securities is all that is left and they are now fucked... their shit and greed has been exposed and in order to avoid Armageddon the government had to sell the house and take a second mortgage "sort to speak" to be able to barely avoid what seems to be inevitable .....

It all started with the housing/financial market....

...DISCUSS...

[Barefootsies]

I heard a week or so back the government is FINALLY catching on to the giant bank's tricks. They are now, in round two, going to invest in the regional, and smaller community banks.

It's about time they fucking caught on. Giving the money to the conglomerates is not going to get the economy rolling. They just keep hoarding the money. The smaller banks and credit unions will put that money to work.

Too bad they did not have any fucking sense on this little tidbit until after blowing billions.

The point in investing in all the smaller, diverse, community and regional banks avoids this whole "too big to fail" monolith of socialism. Same as all the telcos, financials, and many other industries keep merging. That is UNHEALTHY for the economy, and long term stability of world markets.

Smaller, more nimble, better oversight is the better solution. All monoliths need to be broken up, same as they did at other times throughout history.

[Vendot]

They are hugely over leveraged. Simple as that.

Sure, I understand that but why, i mean apart from sub prime and toxic debt? Is it the capitalist system that encouraged too much leverage due to competition ie so institutions could get bigger and bigger than their competitors?

See because SBI and BOC are also operating in competitive environments in their respective countries (India & China) and they dont have these problems.

[AlienQ - BANNED FOR LIFE]

Yet the top guys get paid over 10 million a year plus Bonuses.

Nah... These money changer's are not greedy or anything.

[Vendot]

BofA isn't in trouble...

http://www.bloomberg.com/apps/news?p...onk&refer=home

Announced today, BofA has been given a $138 Billion lifeline....... do all banks which arnt in trouble get lifelines?

[Ethersync]

http://www.bloomberg.com/apps/news?p...onk&refer=home

Announced today, BofA has been given a $138 Billion lifeline....... do all banks which arnt in trouble get lifelines?

[pornguy]

Watch the commercials on TV from the banks and figure it out..

Think for one second they have cut back on expenses that should have been cut back on???

[Ethersync]

BofA isn't in trouble...

Official Statement off the wires at 12:15am

*US TO PROVIDE $20B IN FRESH CAPITAL FOR FIRM; TO BACKSTOP $118B IN CO'S ASSETS
- US Treasury to buy $20B of BoA preferred stock with 8% dividend
- To protect BoA from potential losses on $118B of assets
- Firm to absorb up to $10B in losses, Treasury/FDIC will share the next $10B in losses; losses above $20B shared 90% govt, 10% BoA
- Then the Treasury and Fed will provide protection against larger losses; Fed to backstop losses with a non-recourse loan at a floating rate of OAS plus 300 bps/yr.
- FDIC will extend temporary liquidity guarantee maturities
- FDIC may extend loan-guarantee program for banks to 10 yrs.
- Guarantees cover assets with current value up to $37B, derivatives with max future loss of $81B
- As part of the agreement Bank of America will not be allowed to pay dividends above $0.01/share.
- Also, Bank of America has agreed to participate in a mortgage-modification program.

Yeah, you're right. Nothing to see here

[Ethersync]

*US TO PROVIDE $20B IN FRESH CAPITAL FOR FIRM

...and Bank of America's market cap is 41 billion. Incredible.

[sortie]

Not that big of a suprise because the company became a belligerent piece of
shit and failed in Hawaii and pulled out of the entire state a few years back.

[tranza]

They heard the gooberment was giving away teh moneys...

ADG

[PastorSinAlot]

BOA Jack me around so bad, I hope they close down

[LiveDose]

Get ready for the banking system to be run by the government, so to speak. The top dog politicians are drooling over this. Get ready for The Bank of United States...

[Rochard]

Wait a second here. The economy is going down the shitter, the housing market has crashed, so what does BOA do? They buy Countrywide?

These fuckers don't get it. Everything is crashing down, and they are out buying more companies because it looks good in their portfolio. WTF already?

[Ethersync]

Wait a second here. The economy is going down the shitter, the housing market has crashed, so what does BOA do? They buy Countrywide?

These fuckers don't get it. Everything is crashing down, and they are out buying more companies because it looks good in their portfolio. WTF already?

It makes perfect sense actually. They buy these companies to make themselves "too big to fail" thus guaranteeing cash from the government. The US tax payer is being fleeced.

[lazycash]

I'm sure the acquisition of Countrywide didn't help much since they are now having to settle thousands of lawsuits in multiple states against Countrywide for unscrupulous lending practices.

[Snake Doctor]

...and Bank of America's market cap is 41 billion. Incredible.

Market cap is meaningless in a situation like this.

Most people don't know this but the bond market dwarfs the stock market. The stock market is like a pimple on the bond market's ass.

The sum total of all outstanding shares doesn't mean much for a bank. If you bought up all of their stock, you would then own all of their assets AND liabilities.

It's their ledger that matters.

[Vendot]

It's their ledger that matters.

What kind of ledger? And who gives a fuck when you're bailed out for $138 BILLION