Comments on: Uncertainty and indecision threaten Bank America and global markets Wed, 16 Jul 2014 00:47:01 +0000 hourly 1 By: Kosta0101 Thu, 11 Aug 2011 23:18:17 +0000 Fabulous proposal Chris, but isn’t there an argument that the major reason why BAC is presently a too big to fail zombie is because it bought Merril Lynch in October 2008 at the behest of the Treasury and Fed? Moreover, in November 2008 when BAC discovered that ML was in far worse shape than they expected, BAC tried to back out, but was instead coaxed/coerced into staying the course by the Treasury and Fed (at the tail end of Henry Paulson’s term). Would it not be perverse if the Treasury and the Fed now turn around and restructure BAC wiping out equity holders and haircutting creditors? Could not the argument be made by many of the equity holders that they suffered this loss because of intervention of the Treasury and Fed in November 2008?

Restructuring BAC is problematic because of the Treasury and Fed actions. But instead of restructuring BAC, why not go after Citigroup? It too is a too big to fail zombie, but to the best of my knowledge, it did not receive the same commitments that BAC did in the fall of 2008.

By: evodevo Wed, 10 Aug 2011 19:58:18 +0000 Great idea, Chris. Not.gonna.happen. The administration is captured, big time.

By: Cate_Long Wed, 10 Aug 2011 13:08:06 +0000 Great proposal Chris but I think the FDIC DIF fund (which would be used for liquidity in BAC takedown) is nearly empty of cash.

The assumption has always been that FDIC would draw a line of credit with the Treasury. But with the debt ceiling and supercommittee machinations can the FDIC still draw funds from there? So how would it be executed?

Markit CDS on BAC

By: Paca Wed, 10 Aug 2011 11:21:30 +0000 Excellent plan. My fear is that it makes too much sense and that usually provides the kiss of death as far as politicians are concerned. Moreover, it begs the question, why wasn’t something like this done in 2008? I think eventually something very close to Mr. Whalen’s plan will be what it takes to turn things around. Unfortunately, first TPTB must admit that they blew it and that’s not going to be easy.

By: Independent007 Tue, 09 Aug 2011 17:39:58 +0000 I’ve got to say that this opinion has been the most refreshing in days to come from Reuters. You are actually talking about how to solve the problem. You are not talking through lenses but actually unfiltered now.
I like this very much! Great article.

BOA has very serious customer problems, even as I type this I think about the nearly thousand they literally stole from me by telling me my business account was free, having it go on for 3 years then secretly charging me and REFUSING to reverse the charges even though they acknowledged that it was a free business account.

In America there is much ill will against BOA because of these tactics and others. But even with this said, you are on to something here.

I don’t know if Dodd Frank would give the FDIC so much authority, from plain reading of the Act it gives the FDIC authority over “state thrifts”. The OCC covers the national banks. But even if we could get a restructuring accomplished, Dodd Frank is not fully implemented by the federal agencies it supposedly is supposed to change. They haven’t even responded with proposals as of 2 months ago and had to be prodded to do so.
Dodd Frank allows the bank to continue to trade in derivatives, like before. And although there are some great things that resulted, Say on Pay for example(which to my surprise most of corporate America has latched on to), the very people on the committee that are supposed to enact the changed under DF are part of the problem.

Restructuring would be excellent. But with America’s corrupt politicians and corrupt Treasury Secretary can we trust the right outcome?

Sadly, I think not!

By: haris07 Tue, 09 Aug 2011 17:25:50 +0000 True that this is what needs to be done, I have a couple of questions for Chris (great work, I have been following you for a while now!).

1. Are you surmising that Moynihan will be forced to file Countrywide? What if they settle (Obama adm cajoles counterparties to settle with BAC?).

2. Any Dodd Frank restructuring of one bank could set off a market panic that other banks would no longer be deemed TBTF – at a minimum won’t other bank stocks/bank bonds collapse due to the ensuing panic? Or is your view that this is a small price to pay for ending this malaise (with which I eesntially agree)?