Goodbye Bank Of America Settlement

Tyler Durden's picture

Oops:

  • FDIC OBJECTS TO BANK OF AMERICA MORTGAGE-BOND ACCORD
  • THE REASON FOR THE OBJECTION IS THAT THE FDIC DOES NOT HAVE ENOUGH INFORMATION TO EVALUATE THE SETTLEMENT

Time to sell the other half of that China Constricution Bank stake... And Merrill... and Countrywide (goodluck), and pretty much anything else that is not nailed down. But don't worry: it's a liquidity, not a capital issue, or something. In other news, the Buffett "Eureka alert" is on BathCon 1.

Full FDIC objection attached:

 

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PRO.223's picture

Some actual good news today.

malikai's picture

Does this mean BAC is finished and Buffett is going to take a bath(lol)? Or does this mean Buffett will get paid in the fire sale? He couldn't have taken the deal without some solid guarantee from the man.

Also, what happens when the FDIC does "have enough information" to "evaluate" the settlement?

macholatte's picture

This is nothing but a stall, contrived or planned is irrelevant. What they need is time and they are getting it.

disabledvet's picture

No. It means his 25 billion CDS position thru Swiss Re will soar more.

malikai's picture

Yea, I'd be happy with a 5 fold return on failure. I still don't buy BAC failing. I could buy the attempts to rescue BAC bringing the whole ship down, however.

ToNYC's picture

 

I heard breathlessly reported today on CNBeCzd that BAC was strong because it had $1 Trillion in deposits. Demand deposits are instant hot, totally unsticky liabilities with FDIC guarantees on withdrawal protocols.

How can the structurally leveraged create fractional credit in the face secular trend of de-levering in a developing deflation?

Tunga's picture

Saw that too TonNYC but perhaps you misunderstood the transitory nature of the tradeoff between a reality based perception and the factually fantasized forward facing flop fairly floundering for all to see? More at knee jerk. Per Wikigooglia: That which is not unknown shall be the embraced unless not. Or OPD. (Ontario Police Department)

Infinite QE's picture

Somebody tossed a hair dryer into Warren's bathtub

MarketTruth's picture

Fuck 'em! BAC should be worth a grand total of $0 once they have to go to proper accounting like virtually all other businesses.

Pool Shark's picture

0$?

I should think their net worth would be a rather large negative number...

LongBalls's picture

I can't stand BAC. But I have grown to stop under estimating the will of the elite to keep these banks propped up. When you have endless supplies of worthless paper they will continue to pull a rabbits out of the hat. 

max2205's picture

Unlike lions, the FDIC doesn't eat their young (anymore)

I think they will ask for easier terms

Dick Fitz's picture

MarketTruth- what does your avatar character mean in English?

BofA will be dead, or bailed out, by XMas. Neither scenario will be positive- death would rock the markets 10x more than Lehman, and bailout would be the final nail in the coffin the Bernank sleeps in at night.

tekhneek's picture

November puts, bitchez.

Id fight Gandhi's picture

No kidding, those big buyers last week on the 4s got a cornholing

Joeman34's picture

???, buyers of puts got 'cornholded' by this story.  Presumably BAC price will decline as a result which is positive for long put holders, or am I missing something in your comment....

Id fight Gandhi's picture

They bought 4 nov puts when BAC was nearing 6, it's mid 8s. Right now they're hurting, next week theyll be winning. Buying out of money options hurts which is why near or in the money with higher delta is a safer bet. Its easier to have ITM which perform more close to the point moves the stock. OTM is a big bet some big shit will happen.

4 nov puts have delta of -.04 so every full point the stock moves Down (based on this metric alone) the option will gain .04, which is at .11 right now, when news hit of big buys it was around .50/contract about a week ago.

Nate H's picture

well, ceteris paribus I would much rather have bought the 4 puts than ATM puts with the stock moving from 6 to 8. Less upside but less downside.  "HIgher delta is a safer bet". Uh....WRONG.

Id fight Gandhi's picture

No not higher delta as a probability factor, higher delta as a better proxy trade. Why short shares of the stock when you get leverage and contained loss when you can buy the puts?

You would have lost 80% in that price move from 6-8. Nov 4 puts are a reasonable but very risky bet this will be trading under 4 in the next couple months. With ups and downs, youre better off trading in and out with ITM options.

Id fight Gandhi's picture

I'd rather stay NTM or ITM with 8 or 9 puts, buys less but better delta.

sixdollarsix's picture

I followed the smart money into the Nov11 5,6,7 and this weeks $6 put... I am needless to say, a happy camper. And a Midfirst bank customer, which I might add: offers SUPER customer service and no fee's. lol

Oracle my ass...

Enjoy your DECLINE bitchezzz.

kengland's picture

LMAO!!!! Who needs a sitcom when you have this dumbass reality show!!!!

 

Even more silly are the number of stiff suited pro's like buffet out there who try to substantiate owning such a high quality name.

"Yes, yes, it's very undervalued. I went to Stanford and I know better than you morons out there. I have a few billion involved because, yes, the lack of mark to market capital that you lesser people see is irrelevant to my ivyleageness. "

James's picture

OT - Barrys illegal alien uncle has been arrested in Boston for DUI and immigration violations.

TruthInSunshine's picture

It's all good.

2% to 6% up and down days, each day, are the new normal until it all breaks down.

The Bubbles&BananasBenBernank broke the markets.

 

p.s. - Gotta' LOVE the pattern of the timing as to how significant news is leaked (i.e. after 4 p.m. est, usually, but not always, on Fridays).

traditionalfunds's picture

The deadline for anyone to file objections is August 30. Impossible to do a Friday news dump in that scenario. FDIC isn't perfect but they continue their efforts to limit their own exposure.

Won't be surprised if additional objections arise in the next 24hrs.

 

 

Id fight Gandhi's picture

Maybe uncle buffet can cough up another 5 billion. Hey throw in a sexy nurse and a new jazzy scooter.

Can't take it w u

WestVillageIdiot's picture

What are the details on this?  The FDIC probably killed it because they thought it was too hard on BofA.  I don't see any details.  We all know how fucked up this is.  There is no way this will be amended to more closely represent justice.  By the time this is done The inJustice Department will probably be apologizing to BofA and Mozillo. 

Id fight Gandhi's picture

Mozillo sure made off like a bandit, small fine, keeps most of his gains, now drops off the scene and retires. Beautiful. Bankers wet dream.

BAC is taking a shit deal from buffet and selling assets not hard to read between the lines.

ToNYC's picture

 

It's hard to believe the outcome unless you realize that he is free for reasons you may not know:

It's all Fun and Games

Until the Cops show up.

scatterbrains's picture

I hope you know something and are right !!

A Man without Qualities's picture

He's free because either

i) He was up to his neck in it, but made sure he had a wide array of co-conspirators and enough dirt to drag a lot of other protected people down with him

or

ii) He spent so much time working on his tan that he really had no fucking clue what was going on and was another worthless US CEO, big on bullshit and small on details and they knew that the crimes were ones of detail, so it was very hard to pin anything on him.

Of course, it could be a bit of both, as it was with Ken Lay.

 

 

 

dwdollar's picture

Time for Warren to double down...  already...

IMA5U's picture

amazing how first there s a short squeeze

 

and then the bad news

 

we are all just puppets for The Administration and The Thief of Omaha

fuu's picture

We've always been at war with BAC.

WestVillageIdiot's picture

Let us reflect on this event during the Two Minute Hate today. 

Cdad's picture

Buffett "bathtub alert" is on Defcon 1

Lol.  Good line.  However, Tyler, you and I both know that uncle Warren has zero capital at risk in this BAC share purchase.  You and I have capital at risk...tax payer capital.

Mark my words, this back door, hidden bailout will be revealed for what it is before long.

IMA5U's picture

I call B.S. on The Buffet Bath Tub Tale.

He was thinking of Becky Quick, not BAC.

WestVillageIdiot's picture

Like that crotchety old fark could still fire a torpedo.  If the Quickster's latest devil spawn is a product of Warrent's then you know a turkey baster was involved. 

Cdad's picture

the Buffett "Eureka alert" is on BathCon 1

Chuckling....chuckling...an even better line.

Still, no less revealing about the utter LACK OF equity risk being taken by uncle Warren.  Joe the Plumber...oh yeah, he has some serious risk.  And probably, as others have surmised, to see his tax payer investment end in a capital loss due to a Wall Street Take UNDER of BAC before the year ends.

More fascism please.  I want some more, please. 

lolmao500's picture

Time to die now BAC!