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The truth about Bank of America and the "bailout"
deviliscious
Member UncommonPosts: 4,359
This deserves it's own thread:
uk.reuters.com/article/email/idUKTRE5140OA20090205
U.S. pushed Bank of America to complete Merrill buy
NEW YORK (Reuters) - Federal officials pushed Bank of America Corp hard to complete its acquisition of Merrill Lynch even as credit losses mounted at the troubled investment bank, the Wall Street Journal reported on Wednesday, without citing any named sources.
Bank of America arguably saved Merrill from collapse in September when it quickly struck a merger agreement the same weekend Lehman Brothers went bankrupt.
By December, as Merrill's losses were soaring, BofA Chief Executive Ken Lewis told U.S. Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke he was having second thoughts, the paper said, according to people close to Lewis.
But Paulson and Bernanke on December 17 "forcefully urged Mr. Lewis not to walk away," the paper reported. They warned Lewis that if the deal collapsed, Merrill could be doomed and that their confidence in Bank of America would be "undercut."
Days later, Bernanke told Lewis Bank of America had no grounds to walk away, the Journal reported, citing people who heard the remarks. Another Federal Reserve official warned that if Lewis did walk away and later needed more government money, regulators might consider ousting executives and directors, people close to the bank say.
During the four weeks that followed, federal officials and Bank of America worked out a deal to preserve the Merrill deal. The government agreed to provide $20 billion in additional capital for the bank and to insure against losses on $118 billion in troubled assets.
Officials from the bank and from the government could not be reached immediately for comment on events described by the Journal report.
Bank of America previously received $25 billion as one of nine U.S. banks that kicked off the Troubled Asset Relief Program, or TARP, last fall.
Bank of America's Lewis has come under fire in recent weeks after his bank announced much larger than expected losses from Merrill and revealed it was receiving a second capital injection.
The bank's stock price has been hammered as shareholders, who were asked to approve the merger in December, complain they should have been warned about Merrill's woes earlier.
(Reporting by Joseph A. Giannone; Editing by Anshuman Daga)
Though this omits alot of things it is the truest story of the events that occured that has been reported as of yet.
( and this is not double posting because the last one was from my email :P)
Comments
Good post Devil...
Here's just more proof that the FEDERAL government is incapable of being good at anything but national defense...
http://www.breitbart.com/article.php?id=D965HBF80&show_article=1
WASHINGTON (AP) - A government watchdog group says the federal government overpaid for stocks and other assets from financial institutions under its $700 billion rescue program.
The chairwoman of the Congressional Oversight Panel for the bailout funds told the Senate Banking committee Thursday that Treasury in 2008 paid $254 billion and received assets worth about $176 billion.
The figures were reached by extrapolating the results of a study of 10 government transactions.
The Treasury by Jan. 23 had spent about $294 billion on more than 300 companies under the Troubled Asset Relief Program. In one bright spot, the inspector general in charge of reviewing the funds said the federal government has received more than $271 million in dividends from preferred shares obtained through the program.
ANd libs want MORE power going to this monster.... sad.
This is the true spirit of Capitalism, i'm afraid.
you mean Socialism don't you?
It's plain and simple. Bank of America is owned by a central bank. A bank owned by the Rothschilds family. All it is, is to devalue the dollar so we can go to an Amero. After that Amero, we will be faced with an rfid chip. Once that happends, well, we are effed. If anyone knows what they are talking about they can agree.
You guys are funny. If you're not busy screaming socialist at everything, you're proposing wild conspiracy theories.
Multiplayer Games!
Thanks for this info.
This proof everything I was trying to explain in the other thread, the government was just trying to save Merril Lynch and pushed BoA to make the deal, by promising future bail outs.
There is no conspiracy whatsoever, the government was just trying to save as many financial institution as possible to avoid a complete collapse of the financial market (meaning the end of America as we know it).
As I said, in this particular period, this is normal.
In Europe too, the governments are interferring with the financial sector, either by bailing out or pushing mergers deals between financial institutions.
PS: I cut the less relevant stuff to make it more clear.
The "socialist" ( as in the fear of...) paranoia does run rampant on this board. I don't know if it's just this board or if it's the same on any other General Discussion board.
It's the same on most boards.
American discussions fear socialism, European boards fear capitalism. Always the same arguments.
The banking crisis however is clearly one in the eye for capitalism. Get yourself on some Former Soviet boards if you can stand the flagrant ridicule current day capitalism has earnt itself.
Bank of America was doing very well until the government forced them into lynch." Forced" is an understatement. This was not to save Lynch sorry that is the smokescreen, there was no reason for the government to take conrol of a bank that did nothing wrong, this is giving them a reason. And yes the goal here is to take over the banks not "bail "them out. Bank of America was still thriving even when all was falling around them, they did nothing wrong here. They would still be in the green if you deduct lynch from their books.
That decsion was not a matter of convincing the boards, the boards have never been convinced, they were told they didn;t have an option and the fed tosses them some cheese to go with that "whine".
The government gives them more money not because of a promise, but to actually gain more control, and they will continue to " give " them money, which nothing is "given" to bank of america these injections are debt not "help" debt that they had no desire to have anything to do with but were not given a choice about. Without the injections while they are forcing merger it would put bank of america under. So that is the choice they were given either surrender your business to government control or we will put you under.
They were LIED to about lynch by the FEDS prior to the finalizing, when Bank of America learned the truth about what was really going on at Lynch they wanted to run like they were set on fire, until they were forced to accept the fate they were given by the FEDS. Of course those that normally have a say in this were upset about being told what to do, that is not how their operations have ever worked, but they do not run the show anymore... though it is their money involved here, their people do a good job but are getting screwed by our government.
You keep thinking that everyone believes there is some "wifespread conspiracy" when the truth is it is a very few people calling the shots, everyone else just is duped in the process... including our politicians.
LOL... All the europeans I know run from socialism.. Oh yea that was why they moved to the US, or are trying to... LMAO!
Sorry but I don't think you really understand how the financial sector works.
I told you many times that what happened with BoA and Merril Lynch, in this particular period, is normal.
Every government is doing the same, not just the US, what is the reasons of other countries to do the same?
Merril is not a bloody bank, it is an investment institution, they heavily rely on loans from other banks to finance their investments.
Loans which at the moment have been stopped and Lynch suffered because they do not have enough of their own capital to go alone.
Therefore Merril wasn't bailout material, because the government help wouldn't have done too much of a difference.
Bank of America on the other hand is a Bank and have much more potential to survive, because they have a customer base which deposit their savings in there.
BoA is a much more viable option for a bailout.
Therefore the US government plan (like the UK and EU too) is to incorporate smaller banks and financial institution with bigger and healthiest banks and bail out those bigger banks which have more chance to survive in the long term.
There is no conspiracy and that's the reason why they are doing it.
Once the crysis is over, Bank of America will buy back the shares from the government, and that's the end of it.
First of all show me where I said Lynch was a bank.. Oh yea I didn't. LOL My refeference was to failed banks was actually a reference to when they tried to get them to take on washington mutual prior to forcing it upon Chase, Yes they even wanted Bank of America to take them as well... second of all this may be normal proceedure in the UK and EU but this is far from normal in the US since we have laws protecting our businesses here. It is not their obligation to bail anyone out and forcing them to is unconstitutional. They are being punished for someone elses crimes. What you describe is a forced monopoly of the financial institutions, and having the government running them. ( A hearding of the cattle to make them easier to steer) And you say that "once it is over the bank will buy back the shares" Now how can you know this is their intentions? No instead they are soicially grooming people to think that the banks are bad and need to have the government handle them .. And please do explain how this is "going to be over" anytime soon... Have you been looking at these stimulus packages, I have yet to anything that will actually stimulate the economy, no everything I have seen actually does more harm than good. This is not going to be over , nothing they are doing is helping matters, no they are running it into the point of no return. Even the best economists tell us that this only postpones the inevitable and isn't actually fixing anything, so I am curious as to how you think this will actually solve the problem.
Try the exact opposite of that.
Your argument is like a two legged dog with an eating disorder...weak and unbalanced.
Because they told us.
(And it is the obvious way for them to make the most money).
Honestly Devil you need start reading what has been said.
ME telling you that Merril wasn't a bank was to explain to you why Bank of America has been bailed out while Merril Lynch hasn't.
This was to explain to you why the government pushed BoA to buy Merril instead of bailing it out.
That was basically the perfectly reasonable explanation which dismantle your wacky theory, read it again pls, everyone should be able to understand it.
I will quote it again:
"Originally posted by ste2000
Merril is not a bloody bank, it is an investment institution, they heavily rely on loans from other banks to finance their investments.
Loans which at the moment have been stopped and Lynch suffered because they do not have enough of their own capital to go alone.
Therefore Merril wasn't bailout material, because the government help wouldn't have done too much of a difference.
Bank of America on the other hand is a Bank and have much more potential to survive, because they have a customer base which deposit their savings in there.
BoA is a much more viable option for a bailout.
Therefore the US government plan (like the UK and EU too) is to incorporate smaller banks and financial institution with bigger and healthiest banks and bail out those bigger banks which have more chance to survive in the long term."
Also, in normal situations the EU and the UK governments do not usually broker mergers between banks, US is not different from EU and UK in that sense.
But IN THIS PARTICULAR MOMENT, US, UK and EU governments, all are interferring with the financial system to bail them out, for the reasons I explained many times and above (in red).
It is not a US exclusivity.
I really do not understand on which basis you came up with that conspiracy theory which doesn't make sense at all, when there is a perfectly reasonable explanation for this crysis.
This crysis has been caused by greed and stupidy by the financial system, not by politicians, the governments around the world are trying to savage your economy and mine too.
But that's temporary, it is not going to stay this way for more than is necessary.
The banks will buy back all the shares owned by the governments at the end of the crysis, so the government will get the hell out of the banks business, and everything will go back to normal.
And yes those are written conditions for the bailouts, so it WILL happen.
There is nothing else in it.
Ahh the Rothschilds [hands Eronakis a tinfoil hat]
Another great example of Moore's Law. Give people access to that much space (developers and users alike) and they'll find uses for it that you can never imagine. "640K ought to be enough for anybody" - Bill Gates 1981
Ahh the Rothschilds [hands Eronakis a tinfoil hat]
It boggles my mind how you can ALL be so wrong.
This is a fiendish plot perpetrated by the Rand Corporation, in conjunction with the saucer people, all under the supervision of the reverse vampires.
We're through the looking glass here people...
Multiplayer Games!
The government watchdog group missed the mark.
They failed to include bailout money going to foreign banks such as UBS, in which no assets were received. Currently Treasury is in a pissing contest with IRS. IRS wants to penalize UBS for it's private banking arm assisting Americans in transfering unreported money offshore, but is upset because any penalties levied against UBS will be paid for with TARP money provided UBS in an agreement between Treasury and the Swiss government. So, UBS gets to pay any IRS penalties with US taxpayer money.
In short, TARP money was paid out to foreign banks and no assets were received.
Actually, this has more to do with socialism than capitalism. Where did you learn what these words mean? Someone has seriously misinformed you about political economy. Probably some socialist education system.
fishermage.blogspot.com
Honestly Devil you need start reading what has been said.
ME telling you that Merril wasn't a bank was to explain to you why Bank of America has been bailed out while Merril Lynch hasn't.
This was to explain to you why the government pushed BoA to buy Merril instead of bailing it out.
That was basically the perfectly reasonable explanation which dismantle your wacky theory, read it again pls, everyone should be able to understand it.
I will quote it again:
"Originally posted by ste2000
Merril is not a bloody bank, it is an investment institution, they heavily rely on loans from other banks to finance their investments.
Loans which at the moment have been stopped and Lynch suffered because they do not have enough of their own capital to go alone.
Therefore Merril wasn't bailout material, because the government help wouldn't have done too much of a difference.
Bank of America on the other hand is a Bank and have much more potential to survive, because they have a customer base which deposit their savings in there.
BoA is a much more viable option for a bailout.
Therefore the US government plan (like the UK and EU too) is to incorporate smaller banks and financial institution with bigger and healthiest banks and bail out those bigger banks which have more chance to survive in the long term."
Also, in normal situations the EU and the UK governments do not usually broker mergers between banks, US is not different from EU and UK in that sense.
But IN THIS PARTICULAR MOMENT, US, UK and EU governments, all are interferring with the financial system to bail them out, for the reasons I explained many times and above (in red).
It is not a US exclusivity.
I really do not understand on which basis you came up with that conspiracy theory which doesn't make sense at all, when there is a perfectly reasonable explanation for this crysis.
This crysis has been caused by greed and stupidy by the financial system, not by politicians, the governments around the world are trying to savage your economy and mine too.
But that's temporary, it is not going to stay this way for more than is necessary.
The banks will buy back all the shares owned by the governments at the end of the crysis, so the government will get the hell out of the banks business, and everything will go back to normal.
And yes those are written conditions for the bailouts, so it WILL happen.
There is nothing else in it.
No offense intended, but in English, the word is crisis. Is there some particular reason you prefer crysis? The game or Cryogenic Stockholm Ion Source, perhaps?I googled it and that's what I get.
fishermage.blogspot.com
Yes, the game.
I've been playing the game for the last few months, now that word is just like one of those songs that pop up into your head and you can't get rid of.
I need to reprogram my brain
I hope this little mistake didn't distract you too much from the issues that really matter.
Yes, the game.
I've been playing the game for the last few months, now that word is just like one of those songs that pop up into your head and you can't get rid of.
I need to reprogram my brain
I hope this little mistake didn't distract you too much from the issues that really matter.
Of course not -- I am not easily distracted. I was merely wondering if there was some literary reason you were using that spelling. I completely understand getting used to spelling something a certain way.
fishermage.blogspot.com
1- Other governments are not doing the same. Even Hank Paulson changed his mind before the TARP was passed.
2- Merill should be wiped out.
Three- The merger was a means of bailing out Merill through BOFA, and making BofAs collapse much more threatening. BofA, so far as I know was NOT thriving BTW.
4- None of these institutions should be ever have been bailed out and there is almost no chance that we will ever see the money again in our life time if ever. These institutions, ust like AIG will continue to drain money until America can literally no longer pay. The net bail-out will have be AT LEAST 4 TRILLIONS DOLLARS according to GS CEO.
footnote- this was really hard to type out. most of my keys no longer function.
___________________
Sadly, I see storm clouds on the horizon. A faint stench of Vanguard is in the air.-Kien
http://www.penny-arcade.com/comic/2006/12/13/
Other governments are all doing the same.
They are borrowing loads of money and splashing it around in an attempt to kick start an economic mini (consumer) boom. (As if that wasn't the very solutions that got us here in the first place).
Who gets that money in each different country depends on which party is in power. They will give it to which ever segment of society they think is most likely to vote for them and they will give it to whichever of their critical industries they think they will need in the future.
Governments aren't part of the solution they are part of the problem.
You can't continually borrow you way out of debt. Once in a blue moon perhaps, but not again and again and again every 4 years ad infinitum. In the end there is no more money available to be commercially borrowed, and that is where we are today.
The market needs to rebalance. People need to get used to living with less. It's painful and bailouts are nothing more than an attempt to mitigate the pain. If you are looking for them to be a solution, you misunderstand the nature of the problem.
Although I agree that many of these companies should be left to go bust, kill or cure isn't necessarily the easiest and best way to deal with things. Also it is not possible to do the right thing everytime in a crisis. Decisions that might otherwise take years to be explored and deliberated upon, must be made in a matter of days. Some of them, many of them, will be wrong.
If the American Dollar does go bust, then you have done well and it has gone bust in a time when you have never been more in debt. If it is going to go bust, then right now is the most beneficial time in history for it to happen. All those debts. Erased. What difference if the government has just borrowed an extra 4 trillion if it goes tits up? Far better it has had the fun of spending the extra money before the party ends.
One of the things you might like to consider before screaming murder at the idea of the government bailing out the banks with a trillion Dollars or more, is exactly how many trillions of Dollars the banks have been paying the government in taxes in the last few years, and hopefully will again in the future. Look on the bright side, in the long run you won't have made a loss.
In fact if your government had decided not to ride them so hard for their money, but instead allowed them to operate for a few years without taxing them, that would have eradicated the need for bailouts almost entirely.
On the UK front.
Lloyds Bank's merger with failed bank HBOS has taken another turn for the worst this week when it turned out that HBOS had another 10 billions worth of debts it hadn't previously declared. My shares are now at 10% of their value this time 18 months ago. I think there is a good chance the bank will be nationalised now. I've re-evaluated my recovery time from 10 to 20 years. I don't see my investment coming back this time.
what shocks me is some of you posters in here that say Obama is the man for this job, but he's the EXACT opposite of smaller government, and less handouts...
He's is the big government KING. and under him it's going to be the biggest ever!
why the double standards with the dems? why vote one way and yet believe another? logic anyone?