Bank of Amerllwide

  • 24 Apr 2009 at 10:34 AM

Friday Is Ken Lewis Day: The EmperorSEC Is Not As Forgiving As I Am

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Sure, Cuomo may have given him an alibi, but the SEC is still pissed off, and plans to remain so for some time:

Cuomo revealed in a letter yesterday to Congress and federal regulators that Lewis testified in December that then- Treasury Secretary Henry Paulson may have threatened to remove the bank’s management and directors if the lender tried to back out of buying Merrill. Lewis said he was instructed by federal officials not to disclose Merrill’s losses, his desire to back out of the merger or the intervention of regulators, according to Cuomo.

If you needed a more direct example of why it is simply a bad idea in every single instance to permit government ownership of banking firms except for the limited purposes of facilitating liquidation, this is it.
Consider what can only be a devastating long-term message to markets: You can never again believe the disclosures from any firm in distress when the government is involved.
Bank of America’s Lewis May Face SEC Probe on Merrill [Bloomberg]

  • 24 Apr 2009 at 10:17 AM

The Pressure!

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cuomo.jpgAttorney General Andrew Cuomo is shocked, shocked he tells you, to find that regulatory bullying is going on here.

A slew of documents sent by New York Attorney General Andrew Cuomo to Washington officials on Thursday detail negotiations between BofA CEO Kenneth Lewis and federal officials and demonstrate the extent to which senior officials were influencing the decisions of a public company.

Being the efficiency fans that we are here at Dealbreaker, we thought we’d save everyone a bunch of time and provide the answer to this question: Senior officials were (and are) significantly influencing “the decisions of a public company” on a daily, indeed almost continual, basis. Apparently, the irony of pointing fingers at anyone and accusing the state of wielding too much power in the present environment is lost on some of our more brusque-minded state officials.
Officials… causing firms… to act… against the interest of investors? The horror. The horror.
Cuomo Urges Probe of BofA Deal Pressure [The Wall Street Journal]
Earlier: Cuomo Corroborates Lewis’s Story

  • 20 Apr 2009 at 10:34 AM

The Fish Rot Head First

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Blending two stories from our Opening Bell this morning, we cannot think it coincidence that the administration has picked this time to begin discussing nationalizing (really nationalizing- not just conducting an FDIC raid and dropping firms into receivership) the banks in its TARP clutches by converting its holdings into common stock, putting conditions on TARP repayment like another inventive “test,” (giving PR and spin cover to banks that don’t pay it back because they can’t without rupturing their own spleens) and angsting over the timing of stress test releases.
Why, we might ask, is the administration so worried about tests that, in their own words, the banks cannot fail? Why, we might ask, is it only now that we are hearing about the much more aggressive nationalization possibility- and why is it mentioned only in the same breath with the notion that it will provide new capital? Just when Bank of Amerillwide and Chris Marinac are talking about the end of this nationalization-speak (B of A one-time gains in the period saving the bacon- if you buy that sort of “saving the bacon”) the administration fires up the nationalization-speak. Hmmm.
Something is rotten in the state(s) of Denmark.
US to put conditions on Tarp repayment [The Financial Times]
U.S. May Convert Banks’ Bailouts to Equity Share [The New York Times]

  • 07 Apr 2009 at 1:57 PM

Totally Unfounded Rumor Of The Day: Bomb Left At Bank Of America Branch In Springdale, AR

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The situation is fluid. More as we hear it.

  • 27 Mar 2009 at 4:20 PM

Presented Without Comment: This Will End In Tears

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Bank of America Corp. plans to increase some investment bankers’ salaries by as much as 70 percent following the takeover of Merrill Lynch & Co., people familiar with the proposal said.
Bank of America, which has received $45 billion of taxpayers’ money, may raise the annual base pay for some managing directors to about $300,000 from $180,000, said the people, who declined to be identified because the final numbers are still under discussion. Salaries for less-senior directors would climb to about $250,000 from $150,000, and vice presidents would get $200,000, up from about $125,000, the people said.

Bank of America May Raise Investment Bankers’ Salaries by 70% [Bloomberg]

  • 25 Mar 2009 at 11:40 AM

What, Exactly, Do They Know That We Do Not?

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No lesser source of scintillating financial analysis than the New York Post is reporting the suddenly ravenous appetite of Citigroup and Bank of America for mortgage backed securities.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.

The Post, surprisingly, declines to provide details so we are left to wonder. Shrewd public relations? Doubtful. Altruistic financial patriotism? We think not, but BofA claims so:

“Our purchases in [mortgage-backed securities] increase liquidity in the mortgage market allowing people to buy a home,” said BofA spokesman Scott Silvestri.

Shameless profiteering? Yes, of course. But we don’t suppose anyone would believe us if we said that Citi and BofA are calling an MBA bottom… would they?
Double Dippers [The New York Post]

  • 20 Mar 2009 at 11:32 AM

Those Tricky Merrill Losses

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The Financial Times reminds us today that those last minute Merrill losses almost derailed the Bank of America deal, and wonders how deeply our favorite exec was involved.

Bank of America was directly involved in markdowns that contributed to Merrill Lynch’s $15.3bn loss in the last quarter of 2008, its final reporting period before the Wall Street bank was acquired by BofA, sources familiar with the matter say.
Mounting losses at Merrill during December almost derailed the acquisition. Ken Lewis, BofA’s chief executive, threatened to walk away from the deal unless the US government provided $20bn in extra capital. The deal closed on January 1 after federal officials pledged their support.

And on those shifty credit default swaps?

Mr Cotty also gave his blessing to a $1bn writedown of credit default swaps involving investment grade companies. The markdown of a position on the “high vol 4″ index transformed a gain of $100m into a loss of $900m, said a source familiar with the matter.

Ouch.
BofA linked to Merrill writedowns [The Financial Times]