It's so clear that it's Lewis's poor judgement and Thain is clearly outperform Lewis by a light-year by selling his bag. Fire Lewis, hire Thain!
1) The lower it goes, the "better" it looks? 2) Another wave of institutional investors may "bail out" on BAC at $5.00 and $4.99/share. We'll see.
BAC is sitting on the eye of the hurricane. ML is the source of this entire debacle. When its said and done there will be more write offs in the billions coming. They own alot of companies which they leveraged to buy the crap and now the market is calling to redeem the shares they have no value. Thain Greased BAC good BAC needs to take the good assets out of ML and spin off the rest and let it go to zero. That dividend has to get cut. This deal was a lifetime dream for BAC. TARP is worse for our children than you can imagine... BAC needs to eject ML..
I still don't understand why BAC rushed into the ML deal. They could have at least waited and picked it up much cheaper.
The toxic assets are actually no on the balance sheets. They come to light when they have to sell something to cover something else. Do you see why now that the FEDS cannot control these deals. Book Value is being affected. The solution to all of these deals is raising the Net Capital requirments for all BROKER DEALERS/ BANKS. Glass steagel should be repealled. Banks have no business trading stocks. BAC got shafted and the ML guys walked away with a smile...
even for the "experts" the premium was not a problem until collectively people realized "OMG we actually might fail." Back when the deal was inked it was at a premium, since it was a dream deal for BAC. Not much difference than the impulse buying many of us do at sales racks. Oh wow 20% off... great deal... but off what??? That was business back then, no problems. The more you spend the more you make. It usually worked out in the end even if purchases were at premium. The profit margins just shrank a bit and all was well as long as the money flowed. Problem is... money stopped flowing and their golden goose becomes the albatross. With a socialist President and congress (Bush not much different) BAC is NOT a buy at $6 Anything to do with their common shares at this point is speculation (with a slight leaning toward gambling) Common shares could easily be wiped out in a blink to "save" the bank, the jobs, and the people's money in the bank. Disclaimer: I did attampt a high $7ish small speculative buy of BAC and stopped out at lower $7ish (that was all me, not blaming BAC, Thain, Obama, etc...)