Report: Bank of America may need another $100-$200 billion

[Bluebear]

This is ugly, if accurate. After the poor handling of the bank bailout by both Bush and Obama, the public is going to have very little appetite for helping. It also raises the question of why the banks received so many tax dollars and then paid out rich rewards to the unrewarding, while still needing money. Business Insider:

So, taking some back of the envelope numbers, it looks as though we could easily come up with, say, $100-$200 billion in write-offs and exposures to "clean up" Bank of America's balance sheet.

A $100-$200 billion hit to Bank of America's $222 billion of equity capital, needless to say, would do some serious damage. Specifically, it would force the company to raise about the same amount to restore its capital ratios.

That's why Bank of America's stock is tanking. The owners of that stock will be the first folks to get hit if Bank of America has to raise more capital. And the lower Bank of America's stock is when it raises more capital, the more they'll get hit.

http://www.americablog.com/2011/08/report-bank-of-america-may-need-another.html

[Taverner]

1. ...and yet the BofA cables were squelched by the new Aparatchtik of Wikileaks...

[Selatius]

2. I recommend all depositors at Bank of America here at DU to move their deposits elsewhere.

Let the fuckers sink to the bottom of the ocean.

[truedelphi]

3. We The Public didn't care for the Bailouts the first time around.

Now that every critical analysis of the original bailout mechanisms has come to pass - that is:

1)loans paid off not with the dollars that were lent, but "funny investment papers"
2) big bonuses for the very people that caused our economy to tank,
3) the banks sitting on the money rather than loaning it out,
4) few real jobs created except for those at Mercedes and Jaguar dealerships and the high end of the RE market,

I am certain that the Public will be even less than enthused.

But in an oligarchy, no one can hear the poor and the Middle Class screaming. (Except the poor and the Middle Class.)

[Firebrand Gary]

4. Fuck em, let them fall off a cliff.

So help me god, not one Democrat better come to their aid. They want to play games, Wall st wants the Tea Party to "protect" them from "job killing" regulation. Then they can have the Tea Party and all that goes with them.

[Bluebear]

5. You said it brother.

[Initech]

16. I agree, fuck 'em all. The banks don't deserve another nickel.

[undeterred]

44. + A Brazillion

[lonestarnot]

63. Damn straight.

Let the baggers finance their bailout. Or let them write out an IOU to fucking k(r)o(t)ch brothers.

[Daphne08]

69. +10000

[timtom]

75. This is the second post I've seen from you.

I like your style, kid!

[Pooka Fey]

76. + 1,000,000.00

[Bozita]

6. May I offer this humble suggestion...

[formercia]

50. I second that motion. n/t

[lonestarnot]

64. JMsJ

[Octafish]

7. The best way to rob a bank is to own one.

http://www.pbs.org/moyers/journal/04032009/profile.html

[DisgustipatedinCA]

8. I gave them the money to fix this problem, and I'm not happy that they haven't

I've paid fees--every kind of fee you can imagine--to Bank of America. They're not real understanding when I come up short, and as a consequence, I have zero, zed, zilch in the way of sympathy for them.

[scorpiogirl]

62. I'm with you on that.

I recently had to stop paying on one of two credit cards I have with them. They "couldn't" help me by lowering my interest or cutting my payments. Though I'm sure when they start calling me from the collections department they will accept any amount I can send them. Funny, how that's only ok after I've paid late fees and extra interest. Oh, and they lowered my limits when I called them too. Thanks for nothing assholes!

[bahrbearian]

9. Nationalize them

[Dreamer Tatum]

11. What does that even mean?

How would that solve anything?

[bahrbearian]

13. So another 100 to 200 billion is OK with you?

[Dreamer Tatum]

22. You tell me - you're the one who seems to want the government to assume it!!! nt

[girl gone mad]

81. That isn't how a pre-privatization (nationalization) would work.

Bondholders would be forced to take haircuts, shareholders would be wiped out, the bank gets broken up and pieces sold off. Taxpayers wouldn't be on the hook for anything.

[banned from Kos]

14. It would not solve a fucking thing - its the last gasp of a know-nothing

with no ideas.

[bahrbearian]

17. We would own the assets and wouldn't have to give Bonus's

But you knew that because you know all.

[Dreamer Tatum]

20. Do you know how much $100 Billion is?

You want the government to take on hundreds of billions of liabilities so a couple hundred people won't get bonuses that would
total MAYBE a few million bucks?


INSANE.

[bahrbearian]

26. Do you know how long a peice of string is? So give them another 100 billion?

[Dreamer Tatum]

27. One more time: if you want to nationalize them, you assume the whole enchilada.

Is that less than clear to you?

Let them deal with bankruptcy.

[bahrbearian]

28. There you finally said it, Let them deal with Bankruptcy , was that so hard.

[Dreamer Tatum]

31. But you want us all to eat their shit so some guy won't get a bonus?

Talk about sending good money after bad.

[banned from Kos]

32. there is no BANKRUPTCY for banks! JEEZ!

The FDIC just takes them over.

You can't have depositors lined up with creditors fighting for crumbs!

Go to Finance 101!

[Dreamer Tatum]

34. I use BK as a catchall for FDIC. nt

[bvar22]

49. Which is exactly WHAT should have been done THE FIRST TIME.

The courts, creditors, and investors would have tracked and accounted for every last dollar.
We are NOW in the same place, but BILLIONS (Trillions?) poorer.


Paulson with Co-Conspirators

Now THIS is "Bi-Partisanship".
Better get used to it, SUCKERS!
Hahahahahahaha!


"Thank GAWD it Passed!!"

I would laugh if it wasn't so pitiful.




Who will STAND and FIGHT for THIS American Majority?

You will know them by their WORKS,
not by their excuses.

Solidarity!
--------------------------------------------------------------------------------------------------------------------------------

[banned from Kos]

29. No one is giving them SHIT! Dodd-Frank kills Bank of America automaitically!

If their reserves fall below minimum standards!

We Won! Us Dems won! (if you give a fuck)

(this report is bullshit - by the way)

[Firebrand Gary]

41. I love, love, love you for pointing that out.

That is right, the Dem's win massively if that happens. Thank you Dodd-Frank, hints the reason why the GOP refuses to allow anyone to head the CFPB and why every GOP Presidential candidate is calling for the end to Dodd-Frank.

[Selatius]

21. We would also be fully responsible for all outstanding debts/toxic assets BofA has, too.

No thanks. Let them enter bankruptcy court, and let the creditors take their pound of flesh out of BofA, I say.

[bahrbearian]

24. I'm with ya there, we shouldn't have ever bailed them out.

But people here seem to think we need to bail them out again.

[girl gone mad]

71. Does your arrogance know no bounds?

Roubini and Krugman are know-nothings. Hudson is a liar. Only "banned from Kos" knows what's what in the world of high finance.

:eyes:

[Bluebear]

80. No. It does not.

[Bluebear]

74. Ass

[girl gone mad]

70. Put them into receivership (pre-privatization, if you prefer).

Get rid of the bad management and start clawing back those bonuses.

Write down the assets.

Wipe out the shareholders.

Force haircuts on junior bondholders.

Make the depositors whole.

Sell off the pieces

Problem solved without any loss to taxpayers.

This is what should have happened instead of the zombification.

[coalition_unwilling]

72. Well, in practical terms, it means that shareholders and

bondholders of BofA are wiped out. IOW, not bailed out. The assets of BofA (essentially its loan portfolio) and its liablilities (essentially the deposits it has) become the property of the FDIC and, through them, the people of the U.S.

'Nationalizing' BofA in and of itself won't solve anything except to bolster the confidence of depositors that their FDIC-insured deposits will be available to them.

In all likelihood, the FDIC would break up BofA and try to sell off the constituent parts to other solvent financial institutions.

[Firebrand Gary]

39. I absolutely agree with this. Bank of North Dakota, right?

[City Lights]

10. Time to use those bootstraps, BoA!

My wallet is on lock-down and the government well has run dry. No more teat sucking for you! Get off your lazy asses and work harder!

[banned from Kos]

12. Goddammit! IF BoA equity falls below new regs - Dodd-Frank NOW

(now = today) provides LIQUIDATION AUTHORITY!

They get wiped out!

What more can you ask for?

[TheKentuckian]

53. If it happens and even then it will still only increase the monopoly effect.

One fewer bank will control the lion's share of the national wealth.

This doesn't work long term with "too big to fail" in effect. The liquidation authority but the size of the banks means there realistically aren't many shots in the gun because there are not enough other resources to absorb enough even at discounted prices. I think the few banks we have now make it all a dicey proposition anyway. We can all think of some ideal chain of events that makes this system work but it is a house of cards.

Authority is one thing, the real world ability to exercise it is a whole different level.

We will either add a big old log to a rather nasty structural fire, bust a bail out, or absorb them and take on their knots of bullshit. I don't see where we gave ourselves an acceptable path nor did we even lay a foundation to build on to get their some fine day.

Unfortunately, compromises and concern and respect for "stakeholders" makes it tough with this many moving parts and when dealing with folks with most of the resource control determined to beat, cheat, evade, or even buy anything that is designed to slow down the money raining down on them.

It will be interesting to see how it plays out though. Just fair warning, the bill working as designed could come with a bit of downside that is pretty dangerous long term and I suspect until regulation is no longer so much of a cooperative situation we will more or less be in trouble or within eye shot of it.

A little more "you cooperate fully as to continue operating and remain free and we'll be seeing to it that you do" would seem a requirement but to do that you have to cap their percentage of GDP and market share.
We don't have them in check at all.

[yodermon]

77. I didn't know this, is there a good article explaining it?

Off to google in the meantime, thx

[Occulus]

79. I suspect very few people here know this.

You should make it an OP. I certainly didn't know it, and I usually pay attention better than that.

[MannyGoldstein]

15. "Make no mistake: Americans realize that in tough times...

we help each other out. That's why Americans understand that Bank of America needs more of their tax money. If we don't ensure that America's bankers have a safety net, they won't be able to continue to play financial games that risk our very civilization.

The rest of you? Peas and catfood, chumps. "

[The_Casual_Observer]

18. BofA will probably go under. Boo Hoo.

[kayakjohnny]

19. So do I.

Now we're even.

[Motown_Johnny]

23. Break them up and sell them off

they failed, let them fail

[Ilsa]

60. I agree. Sell off their good assets to numerous smaller banks.

Let the FDIC work out to collect the bad loans and assets. BofA doesn't deserve another chance.

[mike_c]

25. jump, you fuckers....

[MilesColtrane]

30. It's dead, Jim.

It's been obvious for a long time to anyone who can read a balance sheet.

[marlakay]

33. I say go...

get rid of it. I have a credit card with them zero balance i haven't used in years, keep meaning to close it.

I opened it when i worked for them for a short time as part time teller. Considering I made $2/an hour less than other easier part time jobs they pushed sales sales sales and you had to prove you talked to every poor customer walking in about credit cards, loans, etc.

I hated that. My local bank doesn't bug anyone, and does the opposite gives out free cookies and a thing to wipe snow off in the winter. They never took any money from the bail out because they never did any loans without having 20% down or more.

I quit because they had me working less and less hours down to about 8-10 per week, told me 20 when i got hired and they changed the days I worked weekly and didn't tell me what days until friday before! I could never plan anything, not worth it.

[amborin]

35. TARP 3 just ahead

[banned from Kos]

46. where was TARP 2?

It never existed - that is where.

[amborin]

51. read some history of TARP

[FBaggins]

57. You mean QE3

nt

[amborin]

58. no

i mean TARP

it comprised two phases

[FBaggins]

73. So the next TARP will be #2 - regardless of how many phases it has. nt

[girl gone mad]

68. Why do you comment as if you are an expert?

You are seriously uninformed.

[Bluebear]

86. +

[Samantha]

36. Fannie Mae and Freddie Mac absorbed a lot of these toxic loans

from banks to get the bad debt off their balance sheets. The U.S. government has been trying to peddle them (the foreclosures) off to taxpayers, offering all kinds of incentives, but only a handful are moving. The damage to many is just incredible, and the lower market price is a lot of cases does not offset the thousands of dollars a buyer must spend to fix some of the incredible damage.

And so now what do we hear from Republicans as a result of the government absorbing so much of these toxic loans from banks to help improve their balance sheets? IT IS ALL FANNIE MAE'S AND FREDDIE MAC's FAULT the housing market is in such bad shape. The government should not be allowed to be involved in financing housing. That is a corporate responsibility. Abolish Fannie Mae and Freddie Mac. They offer loans to middle class and lower class people who really can't afford to own a home and should never have been granted a loan. On and on and on ....

It really is disgusting, isn't it?

Sam

[banned from Kos]

38. the opposite is true - FNM/FRE are exercising "putbacks" where

bad loan sold to them are returned to the bank that sold them.

[Samantha]

59. That is what is being reported now

That is NOT what was reported earlier. I think in all probability it has failed to "download" a lot to help the banks' bottom lines, and some of it is being bounced back. It was certainly was reported very early on that both of these entities would be assuming a lot of the bad debt from the big 5's books. Washington is playing hot potato, hot potato with the debt -- nobody wants it so it just keeps keeping bounced around. Eventually, of course, taxpayers will pay (again). Then we will be asked again to bail out B of A.

Sam

[spanone]

37. corporations are people?....tell them to get out and get a fucking job

[Firebrand Gary]

42. Bwahahaha, Perfect!

[undeterred]

47. ...tell them were sick of their "entitlement" attitude

[Bluebear]

52. Love it!

[susanna]

67. That made my day, spanone. Priceless. n/t

[guitar man]

40. My suggestion

They should hold a bake sale to raise the money they need ;)

[MorningGlow]

43. What for?

The fuckers are bleeding me dry. Isn't that enough for them?

[WillyT]

45. K & R !!!

:kick:

[Firebrand Gary]

48. K&R

[Donnachaidh]

54. fuck em all

[unkachuck]

55. whatever happened to 'moral hazard'?

....BoA needs a 'moral hazarding' bankruptcy....

....why do we take our tax dollars and have the government give them to BoA to loan it back to us, or not? Meanwhile, the pile of tax dollars disappears and the banksters get fatter and richer while Social Security and Medicare go broke....

....why don't we just loan the money to each other without any banksters involved?....if the Dems, once again, support this corporate blackmailing scheme, many more Americans will see the baggers as right and will vote accordingly....

[mmonk]

56. We desperately need to go back to the days of anti-trust and Glass Steagall.

[grahamhgreen]

83. +1,000,000,000

[WCGreen]

61. And yet they wouldn't restructure my loan....

[lonestarnot]

66. Fuckers!

[lonestarnot]

65. Are they still be required to produce paper on mortgages they currently hold?

Or can they just take homes whenever they feel like it still? They had to pay active duty for their repos didn't they?

[Occulus]

78. .

Never mind.

[grahamhgreen]

82. Let them fail!

[rdking647]

84. while I think BOA is a piece of shit

Id like to point out that this article was written by henry blodget.
currently banned by the SEC from the securities industry.
in addition BOA has over 125B of liquid assets.

Blodgets back of the envelope calculation is bullshit

[hifiguy]

85. Toss 'em an anchor

tied to a brick. And when they go down, drop a couple of depth charges just for good measure.

[democrat2thecore]

87. Jail them and break BofA up into several companies

The "too big to fail" banks are now even bigger! If you haven't seen "Inside Job" the great documentary about the financial crisis of 2008, it is a MUST-SEE. You'll never see these banks in the same way again.

[Drahthaardogs]

88. BofA needs to be nationalized, split up into regional banks

and allowed to fade into obscurity.