Bank of America to receive additional $20 billion [US bails out BofA]

The International Herald Tribune ^ | 2009-01-16

[rabscuttle385]

BY ERIC DASH, LOUISE STORY, AND ANDREW ROSS SORKIN

Kenneth Lewis gambled on bold acquisitions to build Bank of America into the nation's largest bank.

But the need for fresh government support to grapple with the newly revealed losses at Merrill Lynch, the brokerage firm he snapped up in a rapid-fire arrangement at the height of the financial crisis in September, raises questions about whether the bank has gone a deal too far.

Two weeks after closing its purchase of Merrill Lynch at the urging of U.S. regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction.

The bank had been pressing the government for help after it was surprised to learn that Merrill would be taking a fourth-quarter write-down of $15 billion to $20 billion, according to two people who have been briefed on the situation, in addition to Bank of America's rising consumer loan losses.

The second lifeline brings the government's total stake in Bank of America to $45 billion and makes it the bank's largest shareholder, with a stake of about 6 percent.

[rabscuttle385]

*Ping!*

[the invisib1e hand]

was it worth it, Mr. Lewis, whatever Thain promised you?

[rabscuttle385]

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[rabscuttle385]

[ASOC]

Due dilligence - wuzzat?

Why does the term “pig in a poke” come to mind?

[crusty old prospector]

I thought it was Bank of Amigo.

[massgopguy]

I found out yesterday they charge you for using a Teller. What’s next, Tip Cups?

[blam]

"Two weeks after closing its purchase of Merrill Lynch at the urging of U.S. regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction."

In the dead of the night!!

[TheBattman]

B of A has been one of the biggest proponents of illegal immigration here - catering to the hispanic crowd including lending heavily to them with little to no documentation...

I have no sympathy, and don’t want my tax dollars bailing them out!

[Inwoodian]

If I were Stan O’Neill I would hire a brace of bodyguards.

[RSmithOpt]

RE too to no. 10 (TheBattman): Rumor has it, that BOA is DOA on with at least half of the 2.4 billion 4 qtr loss from credit defaults of unverified card holders (no prior credit histories) / mortgage borrowers....many, many, many, of them illegals.

2 years ago, some dumbutts at BOA thought they grab the market share of 'new' customers by opening accounts for illegals.

Greed does have its consequences, don't it?

[KevinDavis]

As a person who does banking with Bank of America, I have feeling that I will be using a different bank real soon. No I’m not going to pull my accounts, but I have a feeling that BOA will be brought out soon..

[davidlachnicht]

[Orange1998]

[Dutchboy88]

Not to defend these guys, but there may be some connection to the BoA bailout of Countrywide. Picture buying an old house you intend to fix up and sell, only to find it is full of termites, radon, asbestos and needs a new septic system. It seems that this happened to BoA.

[unixfox]

Picture buying an old house you intend to fix up and sell, only to find it is full of termites, radon, asbestos and needs a new septic system. It seems that this happened to BoA.

That's why you have a thorough inspection BEFORE you buy. THEY require it when YOU buy property before they loan you the money.

Apparently they don't follow their own rules when it comes to them buying assets.

I have no symapthy for any of them!

[Zeppelin]

Bank of America, or Bank of Zimbabwe?

[RetiredArmy]

Not to defend these guys, but there may be some connection to the BoA bailout of Countrywide. Picture buying an old house you intend to fix up and sell, only to find it is full of termites, radon, asbestos and needs a new septic system. It seems that this happened to BoA.

That is why you get a HOME INSPECTOR!!! Sounds like BA should have got one.

[Mr. Jeeves]

B of A was acting as a proxy for the government in both the Countrywide and Merrill Lynch deals. They knew what they were "buying" and that the Fed would backstop both deals to avoid the systemic shock of a major failure.

This is just another Paulson/Bernanke action accomplished through an intermediary.