Comments on: WSJ: Bank of America Needs $35 Billion in Additional Equity

By: Apple2k

Apple2k — Thu, 07 May 2009 18:30:00 +0000

I don’t understand how they could possibly botched this badly after already receiving federal bailout money. This stress test was designed to show which banks could and couldn’t survive and obviously Bank of America deserves to go. I saw this news coverage of the stress test and it really cleared up some of my confusion: http://www.newsy.com/videos/stressing_over_stress_test/

By: carol765

carol765 — Thu, 07 May 2009 10:02:00 +0000

at Carmen:
get rid of your short, and do not short again.

If it leads you to hope for negative news on employment, i.e. even more people having lost their jobs than already expected, than surely something is horribly wrong.

By: Carmen A.

Carmen A. — Thu, 07 May 2009 04:13:00 +0000

I agree. It makes no sense that the market hurded up. I made the mistake and shorted BAC. I sit at $11.09. I am taking the perverbial "Bath". For May 7th and continuing I do not know how to trade this mistake. I am wondering if I should sit tight to see if there is a pull back.

I understand that there is a bull snarl in the works as the market has passed it first resistance of 8000 and on its way to the 8500 resistance. Thereafter it will continue to test the 200 to the 9000.

I hope that the Friday news is negative on emplyment so that I move out withour ER attention. Does anyone have a suggestion.

By: marsha donner

marsha donner — Wed, 06 May 2009 20:32:00 +0000

of course Bof A stock went up today on news that it did or did not need ONLY 35BN (depending upon what you read)
when the gov’t says no banks will fail (even if they fail the ’stress’ test)..why not buy the stock?

By: AP

AP — Wed, 06 May 2009 17:30:00 +0000

I wish I could run a business like Bank of America. Unfortunately, us peons are nothing more than ‘free’ slaves to our terribly corrupt corporatocracy.

By: Chindit13

Chindit13 — Wed, 06 May 2009 15:40:00 +0000

This one has a few too many twists and turns. If I am reading all of this dribble correctly, it seems BAC will convert---at a favorable rate---$34 billion of the TARP money, leaving it owing the taxpayer only $11 billion. It will then pay back the $11 billion so that Ken Lewis can go back to overcompensating himself for a job poorly done.

The market seems to love this dilution, either because it is less dilution that was priced in, or because this frothy rally just has people acting the fool.

The taxpayer loses both the preferred dividend and the semi-senior position in line for BAC's New Account Complementary Toaster inventory. In exchange it gets a majority position in a bank heavily exposed to a housing market where median home prices are off 50% (CA), mortgages to this market carried on the books anywhere from par to minus 30%, a CRE portfolio just beginning to smell bad, an OBS and derivative position that may or may not have losses far in excess of all of BAC's capital, and with the very same cast of characters in charge who put the bank in such a miserable state.

Sounds like a great deal.

By: profnickd

profnickd — Wed, 06 May 2009 15:12:00 +0000

These stories all possess a recurring theme — that the government should “save” the largest banks, with the assumption that they can continue as ongoing concerns.

The Fed/Treasury and a lot of stakeholders in market think that there is a future for these firms — there isn’t, at least not without either a.) screwing over taxpayers or, b.) screwing over the banks’ creditors/bondholders.

By: haljett

haljett — Wed, 06 May 2009 14:26:00 +0000

Interesting how this info is being leaked. I think we should wait for a bit more info before making some judgments on how hard the gov was on their stress tests. Could easily say that they BofA actually needs twice that amount but tests were designed to lessen it.

I continue to be concerned at how the gov is taking active roles in businesses and what will result from all this is what will be telling about the future of our economy.

By: carol765

carol765 — Wed, 06 May 2009 13:55:00 +0000

at chindit13

¨In calculating the capital buffers, regulators accounted for off-balance sheet units that banks will be incorporating in 2010 as a result of proposed accounting rules changes. Banks may bring on about $900 billion to their balance sheets as a result of the change, and supervisors boosted the risk-weighted assets in their assessments by $700 billion, the Fed said.¨ source: bloomberg.

So, it is not as bad as you fear.

By: DownSouth

DownSouth — Wed, 06 May 2009 13:34:00 +0000

@Independent Accountant,

I'm with you.

My guess is we have is a criminal banking class being regulated by a criminal regulator class.

In this netherworld, it's impossible to know what is really going on.