Charging a bank for an implicit government guarantee to absorb losses? According to the Wall Street Journal, the Federal Reserve and Treasury are demanding that Bank of America pay $500 million to exit a bailout deal that was never actually signed.
The Great Debate
from Rolfe Winkler:
When I was 14, Warren Buffett wrote me a letter.
It was a response to one I'd sent him, pitching an investment idea. For a kid interested in learning stocks, Buffett was a great role model. His investing style -- diligent security analysis, finding competent management, patience -- was immediately appealing.
Shareholders in Bank of America must be hugging themselves at their sheer audacity. They have plucked up the courage to say boo to Ken Lewis, the bank’s all-powerful chairman and chief executive.
Nationalization of weak banks in Britain and the United States may be preferable to current plans for insurance and soft “bad banks” schemes which risk being swamped by future losses as assets, especially real estate, continue to crater.
Government intervention or not, banks will be cutting up America’s credit cards at an unprecedented rate, with grave implications for the economy and company profits.