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BofA DonA
CR,
You need a new post on this Fed taking equities facility, or whatever it is.
Do you understand what this is all about? TIA
AIG looking for federal nipple too.
unbelievable. This stinks.
Third!
Every time it looks like my shorts are going to be bright and shiny, someone poos in them.
I just want to know if this means the Fed will take equities from hedge funds as collateral for new money to then leverage and speculate in whatever they desire to push up and dump on the public. F*ck the Fed/Treasury
Well, I guess I'll be shorting BAC in the morning.
Yes, the new Fed collateral rules are the real news tonight.
Liesman gets it. He's the only one there who does.
Nouriel looks some handsome tonight.
Why BofA would pay $29 for Merill, it does not compute.
Can some one justify this, thanks.
Why do I feel like by the time I wake up tomorrow there'll be 2 more wrinkles to this saga even more unbelievable than this?
WAWAWA,
Perhaps to placate the markets before they bring MER stock to the discount window?
For our customers' conveniece Lefts will be open all night. Use back door.
What does Merrill have on Bank of America? Or, in other words, why is BofA paying a premium?
Merrill must have been backstopped. There is no way BAC could have justified this purchase. MER was headed to the slaughter tomorrow. Why would yBAC purchase now?
There is much more to this story!
BoA over pays again. They wildly over paid for CountryWide last year now they have over paid for MER.
I posted in the other thread something spewed on CNBC about MER being forced by the Fed to sell itself in order to prevent a panic.
Looks to me like there's enough panic going around for everyone. Due diligence? What due diligence? Fed's freaking out, IBs are freaking out -- when do us non-market players start hoarding canned food and shotgun shells?
Both BofA deals were shotguns, you can count on it. In the end, it truly is the Bank of Amerika. And we taxpayers are the ones on the hook when it all comes down. But they will push that day as far into the future as possible.
Anonymouse. I was checking to see if the Fed had anything up on it yet ... not yet, so it will probably be announced in the morning. It sounds like another significant expansion in acceptable collateral to me. From the WSJ:
The Federal Reserve is expected to expand its lending facilities in the wake of the likely demise of Lehman Brothers, taking a wider array of securities, including equities, as collateral for its loans ... Bankers say the unwinding of Lehman Brothers' many trading positions could also create a large need for short-term funds.
Best Wishes.
BofA must be holding some nasty CDSes on Merrill debt or ... ?
AIG is now begging the Fed for some $$$$
I just want to know if this means the Fed will take equities from hedge funds as collateral for new money to then leverage and speculate in whatever they desire to push up and dump on the public.
I watched this video on the Collapse of Argentina's Economy recently, and what really disturbs me is the appearance that their government and banking system basically conspired with private industry to rob the general population of all their wealth.
It's horrifying to think that there's even the possibility of something like this happening in the US.
Some of these recent news reports really make me wonder...
night. Use back door.
sorry, the back door has been used and abused...
This should act as a firewall for the markets tomorrow morning. We are starting to run out of marginal financial institutions. Once AIG, WaMu and Downey Savings are gone, I think we will have much smoother sailing.
This financial crisis has been very entertaining. It is so refreshing to see so many bad actors get their just desserts.
i think we can all awgree that the MER failure would have been more costly to many people than the cost to BAC of buying a negative value firm.
someone else said the BOA bought 1. to bring as collateral to the discount window, and 2. because the FED demanded that it happen as a small possible sticksave out of fear of the down 10% markets due to LEH ch7 bk filing on monday
The securities could be taken with some discount as a safety margin.
Does this not make Treasuries worth less?
The Federal Reserve's balance sheet is going to look as bad as Lehman's.
night. Use back door.
Why are all the taxpayers walking so funny?
The Merril deal is for BofA STOCK
For our customers' conveniece Lefts will be open all night. Use back door.
What's tonight's bulk specials?
And we all just took it in the back door. Geez!
Someone tell me how I can latch onto the Treasury gravy train. I promise that for enough billions I'll put up a huge logo on a building in NYC. I'll even copy Trump and staple a beaver onto my head for the right amount.
Got Popcorn?
Neil
Here's an article on the newly expanded window:
Fed Expands Lending Facilities in Bid for Stability - WSJ.com
when does Bank of USSRA IPO?
This was pure desperation. You can bet that part of the deal is additional MER toxic garbage either dumped on the Fed, or indirectly to a posthumous Lehman.
Liqidity is not the issue...the LEH failure proved this!
"AIG is now begging the Fed for some $$$$"
Huh? AIG is an insurance company, not a bank. How can an insurance company go to the Fed?
Immense changes this weekend. Next - the Fed confessions, AIG and... WAMU.
What a wek we have ahead. There won't be enough popcorn!
Now I get why the street has been locking BAC at 34 lately....
28 the floor in the am.... scoop there
BofA must have some super-duper secret offshore shadow revenue stream. Based in Medellin Colombia.
Or the aliens are wiring funds to them from the Gamma quadrant. WTF!?
yeah, having rode BAC from $20 to $30 I'll be keeping an eye on the options this AM.
"The Merril deal is for BofA STOCK"
Now, this makes sense. Buy crap with more crap.
Furthermore, I will be closing my BAC account in the morning. Anybody this stupid won't be touching my money.
OK. Can we get some news on WM?
B of A loves to buy garbage. We won't know until later how much assistance they will get from the Fed.
BofA must have some super-duper secret offshore shadow revenue stream
actually they do. Being a first-tier bank, they get a massive income from the float.
so the federal reserve is now a full fledged pawnshop
okay, so what are the DOW predictions for tomorrow?? Anyone taking bets? This is the opening on a major financial deluge and further dollar weakening. We are screwed.
"i think we can all awgree that the MER failure would have been more costly to many people than the cost to BAC of buying a negative value firm."
OK, say we can. But which people? There is the heart of it - who is our government working for? Please don't answer, by the way. We all know.
so what are the DOW predictions for tomorrow
nothingburger
they caught a a kitchen full of knives?
700+ visitors on a Sunday night?
Crikey!
so the federal reserve is now a full fledged pawnshop
No.
Pawn shops usually only hand out cash in exchange for things of value.
to HUGE trading floors to consolidate
BAC brand New midtown building, with two fewer people to trade against.
internalization of order flow now for BAC is F***** Ginormous...
Short Knight Securities.!
Well, if visitor count is any guide, we'll get a nice pop.
700+ visitors on a Sunday night?
Its going to be too interesting of a week... 740 right now as I type.
This is getting too interesting...
Got Popcorn?
Neil
Monday:
B of A buys Catholic Church at stunning discount.
Hoocoodanode?
Got glod?
Not worth an FRN.
So many great cliches will come out of this mess. Where do you think we got other sayings; "Brother, can you spare a dime?", "Not worth a Continental".
By 10 am tomorrow MER stock will not be close to $29 (the theoretical buyout price).
Are We There Yet?
Holy crap. New comments faster than I can refresh. 771 online now.
MER + BAC makes no sense at $29
Leftys Liquors and Lubricants , can we work out an arrangement to distribute my Hemp Salve from your outlet? I don't need much counter space, was thinking of dispensing from gallon ketchup pumpers into those little paper cups.
CR,
Question for you:
Why do you think BoA paid the premium. This does not compute.
What do you think.
Thanks
as an ex-employee of merrill and still long some stock options, i certainly dont mind the $12 premium off of fridays $17 close..but this smells funny to me...if bofa waited 3 days, she could have merrill at 12-13, easily...like bofa really wants to part with 44bln in capital at this time to buy an obsolete inv bank? it doesnt make sense man.....
Somehow the Fed or Treasury must be behind this. The BoA/CFC deal never made any sense either, barring gov't doing something behind the scenes.
Wall Street Trades Special Sunday Session
By Michelle Caruso-Cabrera, CNBC Reporter
An extremely rare Sunday afternoon Wall Street trading session, held with the intention of reducing systemic risk posed by a potential bankruptcy by Lehman brothers, descended into chaos, said one participant.
BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
B of A is actually the Vatican Bank. They are bankstopped like Scrooge McDuck's vault.
Damn, bad timing... my next three days are miserable work-wise. Otherwise I'd be glued to this blog even more than usual.
Somebody on CNBC (I'm listening on XM so the voices all blur together) said they had confirmed that the Fed pushed BoA to buy MER.
Perhaps someone, somewhere, knows who will be killed by the Merril short squeeze tomorrow morning?
GettingevenwithCNBC,
CR had a thread earlier in the year asking to nominate 2008 Word of the Year.
I chose your parting thought.
"Why do you think BoA paid the premium. This does not compute.
What do you think."
Because BofA is holding OTC derivative paper which will explode if Merrill debt goes into default or if Merrill can not pay counterparty risk payments. Just a guess. I have no proof, but I think this is the same reason JPM "bought" BSC.
If BAC was going to throw $44B away to stabilize the markets, why didn't they just buy Lehman?
What is MER leverage ratio. Won't this buyout put BAC dangerouly close to being undercapitalized?
Some metal foundries in NY got super-rush orders tonight to make copies of the printing plates for Fed Reserve notes to give to BOA so they can just print their own $$$.
Next: BOA takes over the Federal Reserve in an all-stock deal.
NSA writes:
B of A is actually the Vatican Bank. They are bankstopped like Scrooge McDuck's vault.
NSA
Got a link or explanation? That is entertaining.
WHY would they pay a PREMIUM? No one is investigating that SHOCKING fact.
BAC is a must short now
B of A buys Moon from Martians.
Normally 787 visitors online on a sunday night would signify a major bottom.
Unless those visitors keep on predicting a bottom over and over again...
BAC would paid a premium for MER if their exposure to MER going belly up was more than the buyout premium. BAC is stupid, but I bet they can do simple math. MER fails we lose $50Billon or we just buy them for $44Billon. What do ya think?
Brand spanking new AIG article:
AIG Scrambles to Raise Cash, Talks to Fed - WSJ.com
Got a link or explanation? That is entertaining.
Horshack |
Seek, and ye shall find, grasshopper. Maybe another morsel later.
Oops, CR beat me to it.
BAC is a must short now
was a must short at 34...
when it opens, it's a must buy
merrill equity is suddenly worth 44bln at the same time leh's is zero? gimme a fkn break...clearly, the govt is involved here, assisting bofa...it also serves to inflict pain on fnncl shorts whihc must have clearly been an incentive in doing this..leh has 600bln in assets to be unwound and the game plan is to do it gradually, over months..but the bondholders are not going to like this because what if things get worse with real estate, foreclosures, stocks, the dollar, etc...they will want their 60c on the dollar now as opposed to 30c on the dollar by christmas...the liquidation wont be as easy as people think right now..and remember all the lawyers out there..they are coming out of their caves right now to pick at the carcasses out there..
So what happens to AIG policy holders if the company declares bankruptcy? Are those assets that get sold to other insurers? Or is the contract simply null and void?
U.S. Markets Open In 12 Hours.
Popcorn Anybody?
WTF? Lewis pays a 70% premium. Has he lost his god damn mind? If I was a BofA shareholder, I'd shoot him his balls.....
New thread, folks.
Another one??? Sheesh, the prior one's still jumpin'.
866 visitors on a sunday evening.. interesting.
NSA, ... 866, yeah, ok, now the marketing guys are here wondering what the hell is up.
876 Visitors Online
"The Merril deal is for BofA STOCK"
Now, this makes sense. Buy crap with more crap.
awgee, it still doesn't make sense. Because I would expect MER to drop much more than BAC over the week.
So BoA could buy with many fewer shares on friday than tonight.
WTF. Lefty's is the only business I understand anymore: Give him money, he gives you watered down vodka. Perfectly sensible transaction.
OK, I understand now. Our system is completely insolvent. Somebody is going to be left holding the bag - real losses. The goal of the fed/treasury is intent on dispersing these losses to as many people as possible via taxpayers, and via punishing shortsellers. Nobody will be allowed to profit on the collapse.
Lehman was allowed to fail, because there simply wasn't money to steal by bailing them out. Most shorts had already closed positions. In fact, there was more money to steal by letting them fail and punishing knife catchers who dove in at low prices.
Merrill Lynch, on the other hand was the logical bet for the next failure. Plenty of money to be made by shorting them. Hence a HUGE opportunity for gov't/Wall Street to confiscate wealth by engineering a buyout that punishes the money betting on failure.
Think about it. This is about wealth confiscation, nothing more!!!!
I maintain that BAC could have lost more $ if MER went tits up than the premium paid to purchase them. That makes some sense to me...
It's a stock purchase, probably won't close for 3 quarters, in that time Merrill will be down to $5 a share and it will be a deal for BOA, just like Countrywide, speculation that BOA will walk away will drive down the Merrill price and result in another good deal for BOA. Lewis is pretty sharp.
Well I am not a savvy investor but an 'gnorant psychologist
But it appears to me that before you make a judgement you should take the time to look at both sides.
While I don't know Paulson's reasons for stonewalling Mer (The effect of a bailout on McCain, that the CEO is such a hardhead etc)I think the effect is in the right direction. So I think he kept his foot on Mer's neck long enough to get then to fold. But now is stuck with
treating the side effects. Thus loosening the Fed some more.
So what would have happened if he didn't loosen up the Fed. Would it cost the country more or less money?
OT
I would not have thought of it if McCain had not made the fuss about pigs with lipstick. The original glamor pig seems to come from the Muppet show Miss Pigathius "Piggy" Lee.
Sarah Palin seems so much like her I wonder if Ms Piggy was her teenage idol
sue- very sensible. Something convoluted like that has to be going thru his head.
JimPortlandOR, please tell me that was a joke. I'm not a finance person, so sometimes it's hard for me to tell when people here are kidding.
"Some metal foundries in NY got super-rush orders tonight to make copies of the printing plates for Fed Reserve notes to give to BOA so they can just print their own $$$."
Can I take a bunch of old Beannie Babies to Fed window?
CAP, your explanation sorta makes sense EXCEPT that BAC could have bid MUCH less. Why on earth would they bid a premium to their book. THEY know the potential losses to themselves. Merrill didn't.
ALL the leverage was with Ken Lewis. This is going to cause shareholder lawsuits at Bank of America. This has to be the most bone-headed bid in this whole crisis
"So BoA could buy with many fewer shares on friday than tonight."
That just means that BofA knows what BofA stock is really worth.
Just like shooting turkeys in a barrel.
This just seems like a wierd deal.
GH
I don't get your last post. If short-selling is part of market forces then didn't market forces prevail?
Now Ms Merrill may have chosen to put out for the pirate cap't rather then walking the plank toward the sharks.
Are the sharks upset by missing their meal?
They all know each other's books. The FED tells BOA, buy MER cause when LEH goes, MER goes too due to counterparty risk. Price?
Make up a number, make it good. It's backstopped. BOA is inside the house the IB's are out. Lewis is sharp, but does he know the future?
AIG is tapping on the windows. At a trillion, just break the glass.
oops meant lehman not mer.
The point is BAC chose not to wait till Monday to finalize the deal price. That means that LEH's BK filing tomorrow morning would trigger MER's BK tomorrow afternoon. I can't fathom how in the world BAC could have so much exposure to MER's default...
Ken Lewis is still having with i-banking
@foolonthehill
You are ingenuous, hence I will not respond.
MrM,
I believe you are correct!! And I am on the same page as you with my wondering
im sorry i cant help but harp on the 44bln for merrill...there is not a chance in hell that bofa was looking to spend that kind of money for an inv bank, on the same day another inv bank's equity is worth zero. just when i thought the fed/treasury did the right thing in letting leh fail, i am now perplexed and angered by the merrill deal..bofa wanted out of that countrywide deal, no doubt..no way bofa wanted merrill, especially at such a premium..someone is assisting bofa...we know who..perhaps this is the back-breaker for the usdollar. the debauchery has hit unfathomable levels now
Aunt Bushka, is this a good time to float merger rumors? I think not. But just send a few hundred pounds of Hemp Salve in nickel and dime bags for market testing. And no stock swap either.
We'll get back to you.
Now back to hanging on to every word Vince Farrel says. Gotta watch Cramer tomorrow.
900 visitors - all befuddled - hahahaha!
I suspect BAC bid that much because they understand that at tomorrow's market open, BAC's stock price will take a 1/3 haircut. Which will make the price paid in stock just a little less than MER's market cap ($26b) on Friday.
At 1000,I am going to take Zanax, and no I don't share.
TOW: I should have added the /snark tag, sorry. Didn't mean to get your whities all bunched up LOL.
I predicted 1000 visitors by 10 pm and show 1005 as of 10:04 pm.
1005
Who thought this was a good idea? trying to disintermediate lehman on a sunday
Page not found - - CNBC.com
Funny stuff
"Yelling and screaming," occurred in the session, said one participant, with many participants unaware of the rules.
[..]
A key problem: only one half of the trade has an incentive to get the deal done. If a participant owes money to Lehman, they have less incentive to clear the trade. If a participant is owed money by Lehman, they would love to clear the trade, but the price the other side is offering now is extremely high.
they caught a a kitchen full of knives?
-times a ticking
The Ultimate Knife Catcher
YouTube - Carrie 1976 The Final Part
Can't help it. Close to Halloween and there is a house involved.
The big gorilla not in the room is the Chinese Central Banks. As long as they continue to finance this bail out at a dirt cheap price, we will solve this crisis now with all the intervention mechanisms possible. Naturally, something was promised but we figured it was worth the price.
Folks, the Singaporean SWF owns 15% of MER at a cost basis of around $24...don't you think that's why BOA had to offer in the high 20s to keep them happy?
Yes, Maven.
Any predictions on the opening price for BofA and Merril? Will Merril really open at $29.00 per share? Will BofA be down considerably? I am short on both, so trying to guess on what to do next.
Thank you!
From the most recent report on the merger
A spokeswoman for Merrill Lynch declined to comment late Sunday on the report. A spokesman for Bank of America also declined comment.
I have a conspiracy theory on the BofA-MER deal and the Fed announcement that they are accepting equities at the discount window:
Its possible that some ailing Fed Discount Window Teetsucker is holding a brickton of MER stock, so the Fed conspired with BofA to have BofA bid $29 for MER. Now, instead of the ailing teetsucker dumping all thier MER on the open market and driving the price down from $17, the Teetsucker can get $29/share straight from the Fed Discount Window.
Keep in mind that the BofA-CFC deal took 4 months to close and BofA said that the deal excluded the debt. I think that the BofA-MER deal is also a sham and was somehow set up by the Fed.
You'd think the Fed would have learned by now that not letting assets find their natural price (e.g., bring your equities to the discount window instead of selling them on the open market) is not a good thing.
Valuable resource of merrill lynch news summaries: Merrill Lynch
Don't forget the "taxpayer put" and the tax benefits to BoA; get bought Congress members to put "special provisions" into various legislation that just happens to be oh-so-helpful to BoA's interests.
This is a stock for stock deal... and, if all fails, we've seen how stockholders (especially common!) get treated...