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
Print Email Reprints RSS Feeds Add to Del.icio.us Digg This Comments
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