Bank Of America To Get Billions More In Bailout Funds From Treasury

NEW YORK — The U.S. government is nearing a deal to inject Bank of America Corp. with billions of dollars in more aid, The Wall Street Journal reported late Wednesday, citing people familiar with the situation.

The nation's biggest bank by assets acquired Merrill Lynch & Co. on Jan. 1. Bank of America received $25 billion from the government's $700 financial rescue fund, including $10 billion that would have gone to Merrill had it not been acquired.

Bank of America and the U.S. Treasury spokesmen declined to comment in response to inquiries made by The Associated Press.

The Journal, citing a person familiar with the talks, reported that the discussion between the government and Bank of America began in mid-December when the Charlotte, N.C., bank said it wasn't likely to go through with its acquisition of New York-based Merrill because the losses at the troubled company were larger than expected.

Treasury Department officials grew concerned that the stability of the U.S. financial markets would be at risk if the deal fell apart, the newspaper reported. Officials said they would work on "formulation of a plan" that includes new money from the government, the Journal said, citing the person familiar with the talks.

Details of a possible agreement, the Journal said, are likely to come out with the company's quarterly results, which are expected Tuesday.

The Journal reported that any possible plan could shield Bank of America from the bad assets on Merrill's books. One person familiar with the situation told the paper that there could be a limit to how much Bank of America might have to be liable for, with the government covering the remainder.

Banks are struggling to mend their balance sheets after bad bets on mortgages spread to other forms of debt. Some analysts and economist are saying the U.S. government will have to spend far more than the $700 billion it has already approved to aid the financial industry. Only the first half of the $700 billion has been allocated and Congress has not released the second half of the funds.

Comments

[Fraugher]

Easy accountability using market methods:

All bailout loans and funds go to a middle-man private companies (minimum 3) that guarantees a 2% return to the government over 20 years... That company then can measure risk/reward in distributing the money to those who need it subject to smart rules and a max time for distribution. Companies keeps all the gains it makes over 2%.

Viola- instant accountability. Not going to give money to folks who can't explain how they will use it, not going to give money to folks who have no chance of coming out black on the other side... Professional firm required to keep proper accounting. And the tax payers are guaranteed a 2% return...

[ResistanceisFutile]

My last Bank of America Statement was charging 29.99% interest.

My tax dollars are going to be lent at 0% to a company who will in turn lend it back to me at 29.99%

If you don't see something wrong with this picture you must be crazy.

The banking system owns our government, our corporation and our souls.

Let the revolution begin!

[Viper]

And these people would be better at assessing the risk than all those who failed so far.. Oh... What you describe is what banks and investment houses were supposed to do along with the rating agencies... For a fee they make evaluations of returns and risk and charge a fee.

We are now at a point where real estate has dropped more thn 50%... how do you evaluate such a risk.. will it drop in half again ?

Regards

[coco51]

Wait a minute!!! when did BofA aka Fleet, become a bank in need?!!! Wasn't it only in November their Chairman was on most of the news outlets gloating (in that learned southern gentleman way) how well the bank is doing having not gotten embroiled in the credit and mortgage markets like other banks. WTF!!! somebody needs to ask this man some serious questions!!!

[Viper]

Your government asked them to go out and buy Merril lynch so it would not fail like lehmans. Thye over paid in part becuase the underlying asets have dropped more than 20% in 3 months as every peice of real estate in the US basically is dropping to below its 2006 value and most have mortgages greater then the asset value now.

All banks will fail if what they have for security continues these types of declines.

Regards

[Viper]

Thats droping 50% below its 2006 value. Forelcosures are at 10 to 30%. To meet cash requirements under federal law they have to sell assets.. what use to be your hosue for a bargain rate. This spiral continues as their investments in stock and real estate drop.. or those that they loan money to based on security drop... and those loans are called... or houses foreclosed.
Merril , lehmans and bear Sterns went because J.P morgan called their loans by the way and caused much of this problem as it and Goldmans did with their large oil speculation..

Regards.

[EuLupu]

My bank is saying that according with Federal Regulation D I can't have more than 6 per month preauthorized, automatic, telephone, electronic, online and other transfers for all savings accounts.
So... I have ONLY six transactions per month from my OWN SAVING account. The "federal regulation D" says not only that I CAN'T do it but that I will be subject to a fine. They want to see my face at the bank supposedly on terrorism reasons??? If my account balance will have a bunch of zeros at the end, yeah, maybe, but when i am trying to just survive -madness!
CountryWide charged me $4 for making an on line payment(ON TIME!) that would of cost me 40 cents to send it via regular mail and STILL make it on time!
My 401K cut me off the on line access because I dared to make a "round trip" trying to reduce some of the losses that I incurred. The reason - I am "landmining" the strategy of the fund manager!! Strategy of what?? Seeing my money going down every day?? Shouldn't he/the manager pay me for "his strategy"?
These and other myriads fees/procedures that banks are imposing on us (with or without feds help) should be the starting point of ANY BAILOUT!
Capitalism work in mysterious ways - REAL for the little guy and SOCIALISM for the ones staying home and getting our checks.
Madoff did the right thing, he is the only one that got is bailout right!

[Itsmyland2]

I would agree with all of the comments posted below except I work for Bank of America and myself and the other 300K employees of the bank can not afford to lose our jobs.

[INTUITE]

How many jobs, lost homes and other economic chaos has B of A CITI + + + caused. Ineptitude corruption and greed has its cost down the line. Are you comfortable working with one of the many firms who caused the mess, their CEO'S, board members and others still doing well thank you, and you are concerned about yourself and fellow employees.

[Viper]

B of A was not one of the problems... JP morgan, Citi, Goldman Sachs, Merril and etc..

Bof A has problems because the government asked it to take over troubled Companies inorder to stop more failures and thus in effect reduce the ultimate bailout cost tpo the giovernment. They should not have.

By the way the large banks such as b of a loan money to the smaller regional banks...

Regards

[SammyD]

you need to find an ethical company to work for

[NYCMami]

I sympathize. Unfortunately, the day the vultures at B o A decide to fold they won't give a good g*d d@mn about those 300K employees. It's so very sad.


Good luck

[Viper]

B of A was fine till 3 months ago. Was still making money unlike the rest. A low P/E even!

Then the Government because it was fine asked it to take over Country Wide (way earlier) and then recently Merril Lynch... two of the biggest problem creators, since then I have lost about 75K in the B of A. on What was a safe investment with a fair divdend. Merril Lynch's books turned out to be fraudulant (another porblem with government oversight.. B of A given just a few days to check it out.. in order to avoid another big collapse)... but then again the assets whether it be stocks or real estate are worth less each day that secure a banking business..

Remember its assets have been used to support the BAD assets of others.

This problem in large part has been caused by Government... outsourcing, free trade, trickle dowm, and laizez-faire, oil speculation with a big pump of crap such as peak oil... and oil shortages , Iraq which wasted money and took 3 million barrels off the market per day, devaluing dollar, trade deficits. The deregs allowed the speculation of energy prices... The FED raising interest rates to drive down price increases caused by the oil speculation... then that hit the housing market...


Regards

[ClockworkOrange]

My Question: What has B of A been doing with the up-to 28% interest with which they eviscerate their credit card holders?

pitchfork-and-scythe time, folks.

[Furby]

Just a guess but I'd say they're writing if off because no one's paying it.

[OneOleMan]

Not everybody was paying 28% interest on their credit card account, only those who were/are a higher credit risk.

[TXfemmom]

The banks are still doing horrible things to their customers, so why do they need to get money to buy other banks? Capitalism is capitalism and the far right has always claimed that capitalism is the sun and the moon. Why should they bail out Bank of America with more money while Bank of America fights the government on every change to assist their customers?

[LogicNow]

B of A can kiss my a$$.

[JohnGault44]

This really is a misleading headline; it should read "BofA to get billions to complete buy-out of Merrill"

Of all the players, the worst are the investment banks; Merrill, JP Morgan, Goldman & CIti.

BofA either would not have made the deal for Merrill at all or at a reduced price had Merrill's rapidly deterioriating condition been properly exposed.

Instead, the rapid pace caused by the government now causes BofA to be cast in a bad light; remember, the feds tried to force Wachovia into CIti.

How would that have worked out for Wachovia shareholders now?

[Razster]

I closed my account @ B of A last week and moved to US Bank, I have been member of B of A for 25 years of being a loyal customer have given up on them.
They day I walked in and asked to cancel my account was so quick, quicker then when I tried to get in line for a loan... Not to mention the quickness, but they didn't even try to ask me why or ask if it was something they had done - they just sent me to the from teller, swiped my card and said do you want cash or a check.
When I signed up for US bank after telling them I was a B of A member for 25 years they gave me open arms, bought back all my checks, gave me a 1,500 withdraw limit from checking if my balance was $0.00
and set me up for priority loans.

I hope B of A goes under now that I know after all those years of hassle how much better other banks are compared to them.

[Furby]

Makes one feel like a small fish in a big pond. I'm guessing if you were rich, they might have treated you differently.

[JoeBlough]

We need to shrink B of A down to the size where it can be drowned in a bathtub.

[Furby]

You're well on your way.

[ntmessage]

The TARP is not enough to properly capitalize the banks. Those politicizing this fact because they want to raid the TARP without passing legislation for their pet interests are doing a disservice to the county.

Summers was correct in asking the private sector to invest into the banks as well as the government since we are still about 1.5T short of a properly capitalized banking and credit system when you take into account the recession and all of the foreclosures. He is also setting non-existent guidelines to the emergency legislation. Yes, this sucks and yes, people need to go to jail.

At the same time the banking, system is essential. A modern economy cannot grow if its financial institutions are not operating properly. If we cannot grow, we can never pay back what we already owe including all the proposed programs. We will never sustainably grow jobs in any industry. There is no alternative, there has been no alternative and there will never be any alternative to this fact. As unpleasant, as it is we must fix the banking system (i.e. Wall Street) in order to sustainably fix Main Street.

So many still do not realized this is not us vs. them. We are the same and the term cutting off your nose to spite your face has never been truer. If we were not in a Global recession with so many people losing their jobs and their homes it would be a different story.

[Mnemanth]

No accountability, no hand-out. It's that simple. Besides, as stated elsewhere, it's time for the PEOPLE to get a bail out! At least I can budget it!

[luckylily88]

as if they don't get enough "bail-out" money from exacting fees up the yin-yang.

i really hate bank of america. :-/

[Grannysue]

B of A can stand in the back of the line, the American people are in the front, it's about dam time "we had a bailout" since these thugs can't seem to handle their money. Let's put it this way, they are coming to us for a loan, I'd say to them, "Well, your credit score isn't very high, apparently, you cannot handle your money and you cannot explain where the last bunch of money you were loaned went. So as a lender I would say we will have to decline your request based on the above, if you need further information as to why we made this decision, please contact the three top credit reporting agencies, they will be happy to explain it too you", 'NEXT"!