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Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated
With Bank of America investors finally realizing it is game over for the company as a going concern, at this point there are just two options for Brian Moynihan: the spin off of CFC as a bad bank, backstopped by the Fed, or, well, Chapter 11, which for a bank is essentially liquidation (and with CDS trading up 50 bps to 260 a bankruptcy seems increasingly inevitable). It also means that another TARP is on the way. And once America realizes that another several trillion have to be put into its insolvent banking sector, it will get quite violent. The biggest irony: it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.
And the full AIG filing which just put the final stake through the heart of America's most insolvent bank:
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So big investment banks and hedge funds are making billions based on S&P ratings again. What a surprise?
needs a sound-track
Tyler nailed it - he rules barter town
The only question here is which bank 'rescues' (absorbs) BoA; Goldman or JPMorgue. If this continues we might be looking at a massive consolidation in the US financial market where almost everything will be owned outright by these two banks. This will be a 'win-win' since it's much easier to cook the books and hide toxic sludge (and print money) when you own everything, including all the banks, the Fed, Congress and the White House.
I'm fairly sure this will be attempted simply because TPTB always go for consolidation when an opportunity presents itself. The EU will try to go for a fiscal (and fully political) union while Wall Street will go for a bank union based on Goldman and JPM.
One bank to rule them all. Creepy.
I think they get a big backlash out of that approach... They could have easily accomplished this in 2008 when their express backstop of the TBTF caused a stampede from regional and community banks into the TBTF... until the FDIC issued its, hey the coast is clear and we're upping deposit coverage amounts, etc., please stop the non-TBTF bank run.
That said, I do think it's their goal and the industry has done nothing but consolidate... ultimately, the trick to longevity is directly correlated with your systemic risk... when you perversely incentivize rational actors, don't be surprised when a bunch of perverts are running around.
I suspect that it may happen, but there have been a ton of people who are aware of the problems of consolidation and who actively seek to remedy it... granted, when push comes to shove, these people have no power, but I strongly suspect that further consolidation at this juncture is a huge risk.
And, practically speaking, I'm not sure nationalization isn't the only route forward... the real question is going to be when the government relinquishes control... something the power hungry seldom do and not without great effort on the part of others.
There has already been a massive consolidation where small non-Wall Street banks have been purged and the WS banks have mostly picked up the pieces. There could easily have been more of them as you pointed out. Look at http://www.fdic.gov/bank/individual/failed/banklist.html
Most of these banks were no worse off than the TBTFs.
However, as you pointed out, it's obvious that in a sane environment consolidation increases risk but the game may have changed. When you hold all the cards, risk can be neutralized. When there are only 2-3 superbanks left, they become untouchable, even more so than they are now. They not only become untouchable; they become all-powerful - and that's something these people really want. It's not like they are capitalists who like free enterprise and stuff like that.
That's the paradox of capitalism... through competition you are to willfully cut your own throat for the benefit of consumers? I think not! (hence regulatory capture and barriers to entry).
At this point, I have huge reservations about additional, in your face consolidation... when we're to this stage, I think it's likely that the system simply implodes and all become nationalized (I guess in another way, you might consider this the ultimate consolidation). At least that is the same thing that would have to happen should we desire to liquidate them and sell their assets... so, it COULD be a positive... although, I sincerely doubt the power that will come along with that consolidated control mechanism will be handed back in short order and without ancillary problems/raping.
I guess I'll call for a short term banking run... followed by a knight in shining armor FED stick save... only to have the same thing happen again before next year's elections (despite their best efforts to kick the can further). Or maybe I'm just naively optimistic because I want some more time to prep.
Glad I don't have my Au in a safe deposit box at BAC, haha. If I did, I'd be rolling to the local branch right now.
Tyler. Bankruptcy for BofA is NOT an option under Dodd-Frank. The President through FDIC has the power to nationalize the bank WITHOUT congressional approval. That is where it is headed. Imagine all of the mortgages that the Govt. can write off in that bank! This is "Redistributive Change"
Title II: Orderly Liquidation Authority
Title II of the Act creates a new “orderly liquidation authority” (“OLA”) that allows the
Federal Deposit Insurance Corporation (“FDIC”) to seize control of a financial company
whose imminent collapse is determined to threaten the entire U.S. financial system. This
measure addresses companies considered “too big to fail.” A determination by the
designated government authorities that a failing company poses a systemic risk would
authorize the FDIC to seize the entity and liquidate it under the new OLA, preempting any
proceedings under the Bankruptcy Code. The only permitted outcome under the OLA is
liquidation; rehabilitation, reorganization and debtor-in-possession proceedings are not an
option for a financial institution subject to an OLA proceeding. Instead, the FDIC, in nearly
all cases, will assume full control in an OLA seizure. Insurance companies, which remain
subject to state regulation, are not covered by the OLA, but their holding companies and
unregulated affiliates are subject to the OLA. Insured depository institutions will continue
to be subject to the FDIA. In extending or maintaining credit, rating agencies, lenders and
other potential creditors of a financial institution will now have to consider the effect of the
OLA as well as the Bankruptcy Code on an institution that may become subject to Title II.
barney 0'blarney said something about this bullshit, too, when he got all pissed off there, a while back...
...something like: nobody is too big to fail, anymore; no more this, that, or whatever; i think he said it was on p. 4,474... not sure...
Hasbro to add money printing machine to it's Monopoly game to help adults and children understand how the US economy works.........
LOL and they have changed another rule, the Banker never goest to jail.
LOL... Thanks for my second laugh of the day. The first being BOA.
one bankrupt bank full of corrupt banksters doth not a new TARP maketh
benzelbub has been planning for this day for years
if the US financial system can't pop this little infected pimple without hemorrhaging from the ears, then tyler durden is a fuking pussy and i'll be his uncle's monkey
Title II: Odorless Liquifukation Auth.
i rest my case
BiCheZ
BOA: Going home in a body bag, do da, do da.
And UUP now red. My 1,000 piece puzzle almost filled in now. But ya know, I would much rather buy housing, tech and financials. If this country had taken the right course we would not be where we are. But greed always wins, and I am and have been in the mode of protecting my assets and my family. This is such a sad commentary on where we are.
Miners look especially good for a change....so far today.
Has anyone seen a Thomas Jefferson out there anywhere. Anyone? :(((
How stupid can you be, to still have an account with a company named ''Bank of America''? http://www.youtube.com/watch?v=BGe9g_pnT0Y
Tell me again what BoA was doing for the real economy. Nothing? Good riddance.
Hey man, they offered savings accounts in spanish biatchh!!!!
Don't forget the extra steps they take to make illegal alien banking easy!
FDIC will cover your holdings up to 250,000- but FDIC is broke amd has been broke for 2 years.
I sense a bank holiday, gold confiscation and cash withdrawal limits until it dries out
For historical completeness.
Never forget.
http://www.businessinsider.com/2009/2/bernanke-to-ken-lewis-you-have-no-justification-to-dtich-merrill
BAC has about 750BB in off balance sheet derivatives that act as a hedge against mortgage losses supposed to protect them in a mortgage crisis, however if they tried to unwind these contracts would this not create another liquidity crisis.
also they have 1-2T in notional swap exposure, this nets off to peanuts but in the event of a crack in the facade they may find their counterparties unwinding, they are on the other side of the trade and the only thing to do then is hedge again at a higher rate and in my mind at that point they are toast??
I dont think its too late to short them or C ot GS, what does ZH think?
This is huge news. It should be the start of a ton of lawsuits against them. I guess AIG had to get that in, before all their fraud was sanctioned by the government.
Where is Bill Zucker when you need him? Time for Tarp 2 Bill....
http://www.youtube.com/watch?v=yGfQk9XXm24
When does the made-for-TV-Movie-by-CNBS air ???
Nobody's mentioned this yet. Countrywide was the holder of a large % of the bad mortgage loans. BOA was forced to buy them because they were one of the most solvent and stable banks during the 2008 crisis. BOA will take the good loans, will spin off Countrywide, CH 11 that company, and with it, all bad loans will go away. It will be how America cleanly washes it's hands of a lot of bad notes! Done and done!
They already did that.
This was well 'telegraphed' last week, when Jim Rogers let it be known that he was short a big American bank. Would not say which one, but you could see the writing on the wall, that one of the "Humpty Dumpties" were about to suffer a great fall!
I sure hate it I got squeezed out in the mid teens when the load mouth Jim Cramer was telling Crumbmerika to BUY BUY BUY. No short covering rally for you ! bitches !!
Does anyone actually believe one of these TBTF institutions will cease to exist?
I just withdrew $6500 with no problems.
Early bankrunner gets the paper.
No worries, theyll print more when the zombies bust down the doors.
And to think the guys investing in BAC (stabber) are all bewildered as to where their sunshine and lolipops have gone. It was those evil Tea Partiers, yeah thats the ticket!
http://messages.finance.yahoo.com/mb/BAC
The Tea Party must be to blame. Not the big government minded politicians over the last 20 years.... No. Spending less would never solve the overspending and debt. Of course not, Barry.
The fact that there is an alternative to a "balanced budget" speaks to the fundamental flawed thinking. An alternative to balanced budget. Think about that. (And I understand the keynesian devalued/borrowed/debt games. They are a sham and fail over time. A Balanced budget lasts forever.)
The Squid won't want BancoAmericano nationalised; they want it busted.
Anton Valukas -new job for you coming up; you are the man.
And this time, you get some power to enforce action and cull the herd.
#occupywallstreet
http://www.adbusters.org/blogs/adbusters-blog/occupywallstreet.html
Alright you 90,000 redeemers, rebels and radicals out there,
A worldwide shift in revolutionary tactics is underway right now that bodes well for the future. The spirit of this fresh tactic, a fusion of Tahrir with the acampadas of Spain, is captured in this quote:
The beauty of this new formula, and what makes this novel tactic exciting, is its pragmatic simplicity: we talk to each other in various physical gatherings and virtual people's assemblies … we zero in on what our one demand will be, a demand that awakens the imagination and, if achieved, would propel us toward the radical democracy of the future … and then we go out and seize a square of singular symbolic significance and put our asses on the line to make it happen.
The time has come to deploy this emerging stratagem against the greatest corrupter of our democracy: Wall Street, the financial Gomorrah of America.
On September 17, we want to see 20,000 people flood into lower Manhattan, set up tents, kitchens, peaceful barricades and occupy Wall Street for a few months. Once there, we shall incessantly repeat one simple demand in a plurality of voices.
Brian Moynihan at the bernank's office as we speak...with his collateral BWAHAHAHAHA
http://www.youtube.com/watch?v=ZYoUGkQJI64
If there is a new tarp or talf it will be time to start taking out bankers, politicians, and their families indiscriminantly. A fully manipulated yield curve is not enough subsidy for them? If the government and bankers do this to us and no one can stop them, then I believe terror is the answer. It is the only way for us little people to fight back.
Project Mayhem Bitchez!!!
S&P downgrades 11 top global bank credit
http://uk.reuters.com/article/2008/12/19...
Dow under 11000-check
S&P below 1140-check
BAC at $6.75 getting ready to give up the ghost-CHECK!
Sweet justice for the POS bank.
Ya know...
It seems like more and more people are suddenly discovering that living in Ponzi-ville is kind of like living in the house from the movie Poltergeist...
I guess it will be over when the dead banks (Lehman, Bear Stearns) start popping up right before the whole thing collapses and gets sucked into the ground...
The race to the door is starting as we write, everyone turned around and saw the few leaving in a hurry and now the whole stadium of people are trying to get out a double door of money.
Said back in 2008 that I believed that the last credit crisis was a take-down job by Goldman, JPMorgan (and Blackrock) of Bear, Lehman, Merrill and BAC. The Merrill bomb and the looting surrounding it was supposed to kill BAC, but they did not cooperate and die.
Can't have a Charlotte bank competing with the NY Banks now can we? Ya see, the US banking empire must shrink because there is not enough to steal for all of the bankers and their legacies.
So, then what to do to kill BAC? Lawsuits, Wikileaks, more lawsuits and bad press ... and it is working.
My guess is that Citi and JPMorgan could be pushed to bankruptcy as BAC, but for the time being they are on the inside ... for the time being.
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