Interest Rate Roundup

Wednesday, January 14, 2009

BofA back for another turn at the public trough

Bank of America has already received $25 billion in bailout funds from the U.S. government (in reality, taxpayers like you and me). Now, it's coming back to the public trough for another multi-billion dollar feeding, according to the Wall Street Journal. More below ...

"The U.S. government is close to committing billions in additional aid to Bank of America Corp. as the nation's largest bank by assets tries to digest its Jan. 1 acquisition of Merrill Lynch & Co., according to people familiar with the situation.

"The discussion began in mid-December when Bank of America, already the recipient of $25 billion in federal rescue funds, told the U.S. Treasury Department it was unlikely to complete its purchase of the ailing Wall Street securities firm because of Merrill's larger-than-expected losses in the fourth quarter, according to a person familiar with the talks.

"Treasury, concerned the deal's failure could affect the stability of U.S. financial markets, agreed to work with the Charlotte, N.C. lender on the "formulation of a plan" that includes new government capital. The terms are still being finalized, this person said, and details are expected to be announced with Bank of America's fourth-quarter earnings, due out Jan. 20.

"Any possible arrangement might protect Bank of America from losses on Merrill's bad assets. There would be a cap on the amount of losses the bank would have to absorb with the federal government being on the hook for the remainder, according to one person familiar with the matter.

"The possible deal is further evidence of the banking system's delicate condition and its hunger for more capital, despite billions of dollars already invested in financial institutions by the federal government. Thus far, Bank of America has received $25 billion in federal rescue aid, including $10 billion Merrill Lynch would have received if the sale to Bank of America had not closed."

1 Comments:

  • How did we ever get to this point? Has their ever been a time in US histoy when our bumbling politician inadvertantly put the taxpayer on the hook for so much in such a short period? These numbers are breathtaking.

    By Anonymous Anonymous, at January 14, 2009 at 7:52 PM  

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