Wednesday, January 14, 2009

Bank of America goes begging for more TARP money

Billions more to help BofA to digest Merrill Lynch. BAC told Treasury that it needed help to purchase Merrill Lynch. Remember when Merrill Lynch lent their BlackRock stake to the Fed for $10 billion, a stake which is now worth half of that?

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.

So once again, the taxpayer back stops Wall Street. $25 billion to Bank Of America, and now BAC says $25 billion isn't enough.

So why was Bank of America spending $7 billion to buy a stake in Chinese banks in November?

Bank of America has another $40 billion of corporate real estate problems that they are yet not acknowledging. So far, only $4.7 billion of it has been recognized as impaired

I suppose the extent of their acknowledgement depends on the extant and the amount of the taxpayer subsidy!

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