The Bank of America is getting more taxpayer dollars with another infusion of cash from the Treasury. This never ending rescue of banks in this second round indicates the first infusion did not succeed in lessening the impact of the first bank bailout.
The money is going around in circles with the buy our of Merrill Lynch & Company by the Bank of America Corp., it seems like the debt is being passed around to prevent further bankruptcy. It appears Bank of America did not have enough funds to cover the take over of Merrill and Citygroup is also expecting to report big losses.
As the recession deepens the banks are expecting a monsoon of more loans going bad in a worsening economy in itself which is dragging what were borderline loans into the red.
Both are expected to report huge losses on Friday’s report which will in itself send the markets tumbling.
The bailout for the Bank Of America is expected to be 120 billion dollars which is needed to pay off the bad paper from Merrill. It doesn’t seem like anyone is adding this all up especially when you consider that Citygroup received a 306 bailout two months ago.
No one is talking at the Treasury and that could only mean -you don’t want to know. With larger losses looming on the very near horizon taxpayers are becoming livid with anger of the bungling these banks have allowed by buying bad loans and selling them to other financial institutions. The insurance companies that insured these loans are not much better in complicity with this massive fraud on the American public.
This may indicate that the two largest banks in the US will be “owned” by the US government which should be the case after the huge innvestment of taxpayers dollars – it would only make sense to most people. Banks need to be regulated as they are the vital life blood of a country’s financial well being and failure will never be an option in the future. You certainly would not expect to give gamblers more money to gamble with when they lost the whole wad.
It shows the lack of financial sofistication that is lacking in the Federal regulators such as the SEC and various other organizations that monitor the financial system.
Government ownership of banks is very common in other countries such as Canada, England, and Ireland and with government regulations that hopefully they will follow it would be less likely for these banks to ever fail again.
So it seems that Bank of America’s CEO Kenneth Lewis did not estimate the buyouts of Merrill and Countrywide correctly and now needs a bailout himself. Lewis is now contemplating backing out of the Merrill merger.
Investors have no trust in th Bank of America which is bleeding red or Citygroup ability to come out of this recession alive and it is all on the taxpayers backs.