Posted on 07/13/2009 6:14:49 AM PDT by FromLori
Ooh, the sheer brazenness of this is almost admirable. Bank of America is trying to wriggle out of paying the taxpayer $4 billion in fees, which it owes the taxpayer, in exchange for the backstop of $118 billion in Merrill Lynch assets.
On what basis are they doing this? According to Bloomberg, they never actually signed the agreement, and since the backstop was never employed, they don't want to pay up.
Sorry, Ken, but this is total nonsense. That the backstop was never used means nothing, since it's only a backstop if it's possible that it might not be used. If it's not contingent it's not a backstop. It's just a pure gift. It's like, if you bought health insurance, but never went to the doctor one year and then tried to get your money back. Not going to happen.
And as for the part about now signing the documents? Please. We wonder whether the bank would let its own customers off the hook if some paperwork hadn't been completed on a loan. NO CHANCE.
(Excerpt) Read more at businessinsider.com ...
As an officer of the bank it’s his job to try and get the best deals possible. It’s the job of the government not to be stupid enough to fall for it. History has shown that the government fails miserably when it comes to the stupidity test so there is no reason to think BOA is doing the wrong thing by trying to get out of paying.
Join with the government in your thievery.
Bank of America Said to Balk at Paying Fee to U.S. for Backstop - BL, July 13, 2009 Regulators contend Bank of America owes at least part of a $4 billion fee it agreed to pay in January -- even without a completed legal document -- because the company benefited from implied U.S. backing on about $118 billion of Merrill Lynch assets, such as mortgage-backed bonds, people familiar with the matter said. The Charlotte, North Carolina-based bank says it owes the Treasury nothing, according to the people, who declined to be identified because the negotiations are confidential. Bank of America, ranked first by assets and deposits in the U.S., “got a moral commitment for insurance without tendering a check, so it appears they got something for nothing,” said Representative Brad Sherman, a California Democrat on the House Financial Services Committee. “If the government takes the risk, the government needs to be paid.” Bank of America Corp. is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch & Co., saying the rescue agreement was never signed and the funding never used.
First, how would you like to be made to pay an arbitrary amount for a line of credit you never used? And the line of credit you would not need in the first place if you weren't asked to spend billions of dollars for something the value of which could not be determined at the time but which was fast approaching zero or potentially negative amount?
By the way, Warren Buffett was the first one offered by Feds to have a pick of the litter and buy one or two, with Fed-guaranteed backstops... He refused, which tells all we need to know how much of a "bargain" any of them were.
Second, in the throws of financial system meltdown and several large investment banks (Lehman, Merrill Lynch, Morgan Stanley) and commercial banks (Wachovia, Washington Mutual et al) going fast down the drain in a death spiral of insufficient liquidity to stop runs on the banks and inevitable bankruptcies, Fed and Treasury summoned and begged BoA and JPMorgan and some other financial institutions to buy these banks by promising them backstops in case the acquired assets would be insufficient or not liquid enough to weather the crisis on their own. Essentially, these banks bailed out government by agreeing to buy a pig in a poke, at the expense of their own balance sheet and their investors, asking only for liquidity consideration and credit in return.
So now - when the US financial system crisis is over - and while Citi, Fannie and Freddie, and auto unions are being propped up by tens of billions of wasted dollars for criminal mismanagement of their companies, this is how the banks are being repaid for helping out Federal government to stave off a government-"sponsored" financial meltdown?
Anybody wants to stand with Sherman in his efforts to finish off those banks that don't play the ball with the greedy Democrats in Congress and White House, and are trying to divorce themselves from TARP and other government interference?
From now on, would any financial institution bail out the government from financial collapse or even try to help faced with potential abuse and financial loss after the crisis is over?
I wouldn’t worry too much about the banks they have obama in their pocket and they are not getting stuck with the bill we are!
Treasury Department selling TARP warrants at 34% discount
Washington Business Journal - by Bryant Ruiz Switzky Staff Reporter
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The Treasury Department is selling stock warrants back to TARP recipients for only 66 percent of fair market value, according to a report issued Friday by the Congressional Oversight Panel.
Through the Troubled Asset Relief Program, known as TARP, the Treasury Department purchased preferred stock and warrants from banks in an effort to prop up lending.
Warrants, which give the holder the right to buy a company’s stock at some point in the future for a specific price, presented a lot of potential upside for taxpayers, should bank stock prices rise above the face value of the warrants.
Many banks have sought to buy back their preferred shares and warrants from Treasury.
“Because the warrants that accompanied TARP assistance represent the only opportunity for the taxpayer to participate directly in the increase in the share prices of banks made possible by public money, the price at which the warrants are sold is critical,” the panel said.
The panel, charged with determining whether taxpayers are receiving maximum benefit from the TARP, conducted its own valuation of the warrants the Treasury holds. It found that the 11 banks that have repurchased their warrants from the Treasury for a total amount that the panel estimates to be only 66 percent of current market value, shortchanging taxpayers by $10 million.
The Treasury is still in the early stages of its warrant repurchase program, and the panel acknowledges that the prices thus far may not be representative of what is to come.
http://washington.bizjournals.com/washington/stories/2009/07/06/daily90.html?surround=lfn&ana=test
They will also rake in the $$$ with crap and tax!
http://greenhellblog.com/2009/07/08/goldman-sachs-to-be-carbon-regulator/
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
http://www.businessinsider.com/henry-blodget-is-obama-in-wall-streets-pocket-2009-4
http://www.theatlantic.com/doc/200905/imf-advice
Here's who chairs this "panel" and see if you want to take that "report" at face value: Elizabeth Warren Since May 2005 Warren has been a contributing blogger at The Huffington Post. She and her law students write a blog called Warren Reports, part of Josh Marshall's TPMCafe. Warren is married to Bruce Mann, a legal historian and law professor also at Harvard Law School. ..... ..... In 2009, Warren co-authored a second study on medically-related bankruptcies. [10] , claiming the number of medical bankruptcies had increased to 70%. This study attracted significant national attention and controversy. Economics blogger Megan McArdle noted out that no other studies find this same proportion of medical bankruptcies. ..... ..... Warren is a member of the FDIC's Committee on Economic Inclusion. Warren appeared in the documentary film Maxed Out in 2006 and has collaborated with the non-profit organization Americans for Fairness in Lending. She was interviewed for a special featurette on the DVD of Sicko. She has appeared several times on Dr. Phil to talk about money and families.
As far as all banks benefitting from Crap & Trade, I don't know specifically, but I guess, we then should just join Sherman and use this "opportune" moment by making this "payment" a condition or a fee for BoA getting in on a good thing if C&T ever pass?
I am talking about the losses WE the taxpayers are suffering that did not come from Elizabeth Warren but is a matter of public record.
http://washington.bizjournals.com/washington/stories/2009/07/06/daily90.html?surround=lfn&ana=test
The Treasury Department is selling stock warrants back to TARP recipients for only 66 percent of fair market value, according to a report issued Friday by the Congressional Oversight Panel.
Through the Troubled Asset Relief Program, known as TARP, the Treasury Department purchased preferred stock and warrants from banks in an effort to prop up lending.
Warrants, which give the holder the right to buy a company’s stock at some point in the future for a specific price, presented a lot of potential upside for taxpayers, should bank stock prices rise above the face value of the warrants.
Many banks have sought to buy back their preferred shares and warrants from Treasury.
“Because the warrants that accompanied TARP assistance represent the only opportunity for the taxpayer to participate directly in the increase in the share prices of banks made possible by public money, the price at which the warrants are sold is critical,” the panel said.
The panel, charged with determining whether taxpayers are receiving maximum benefit from the TARP, conducted its own valuation of the warrants the Treasury holds. It found that the 11 banks that have repurchased their warrants from the Treasury for a total amount that the panel estimates to be only 66 percent of current market value, shortchanging taxpayers by $10 million.
From your article (and all the business journals and mags it was distributed to): The panel, charged with determining whether taxpayers are receiving maximum benefit from the TARP, conducted its own valuation of the warrants the Treasury holds.
Simply put, she and the "panel" slapped their own (100% maturity value) theoretical valuation instead of real current bond/warrants market / "discount" valuation that people actually trade in. At the panel's "valuation" nobody would buy back the warrants and Treasury would be sitting on them instead of getting liquidity and freeing the banks to do what they (supposedly) want the banks to do - making loans. Let government try and sell these warrants on the open market and see what they fetch for them. They can sell them in class Elizabeth Warren (a friend of holdover FDIC Chair Sheila Bair) is teaching, and see for themselves how their theory hits the fan.
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