The U.S. Treasuryâs bank-rescue plan wonât repair the financial system or revive credit markets, Bank of America Corp. strategist Richard Bernstein said as he recommended avoiding the industryâs shares. Treasury Secretary Timothy Geithner pledged up to $2 trillion in government financing yesterday for programs aimed at spurring new lending and addressing mortgage assets that are difficult to value. The governmentâs prior measures to prop up financial institutions included backing $118 billion of Bank of America securities and injecting $45 billion into the Charlotte, North Carolina-based bank after it bought Merrill Lynch & Co. âFinancial stocks are likely to be as toxic to portfolio performance as banksâ assets are to their balance sheets,â New York-based Bernstein wrote in a research note. They plunged yesterday, driving the Standard & Poorâs 500 Financials Index to an 11 percent drop, on skepticism the rescue package will work. Bernstein said the government should increase deposit insurance, seize assets, shut âlargeâ banks and encourage takeovers. âThe history of bubbles clearly shows that the significant consolidation of the financial sector is inevitable,â the strategist wrote. âThe latest Treasury program is simply another attempt to stymie the consolidation process.â I think Bernstein doesn´t care about his job...
"The tonight show" in Washington . Today with our banker star guests : Citigroup Chief Executive Vikram Pandit Wells Fargo Chief Executive John Stumpf Bank of America Chief Executive Kenneth Lewis J.P. Morgan Chief Executive Jamie Dimon Bank of New York Chief Executive Robert Kelly Morgan Stanley Chief Executive John Mack Goldman Sachs Chief Executive Lloyd Blankfein First question : Monsieur Blankfein, did you fullfill your patriotic duty ?"
Citigroup equity injections: $25 billion (TARP in October) $20 billion (bailout 24 November 2008) $7 billion (fee for November bailout) Total = $52 billion Market cap at share price of $2.60 is 5.45 billion shares * 2.60 = $14.17 billion Bank of America equity injections: $25 billion (TARP in October) $20 billion (bailout 16 January 2009) m22au to look for information about preferred stock issued as a fee for the bailout Total = $45 billion (plus extra as fee for bailout?) Market cap at share price of $4.00 is 5.02 billion shares * 4.00 = $20.08 billion ***********
Citigroup bailout 23 November 2008 http://www.ustreas.gov/press/releases/hp1287.htm In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury. Term sheet: http://www.ustreas.gov/press/releases/reports/cititermsheet_112308.pdf Bank of America bailout: 16 January 2009 http://www.ustreas.gov/press/releases/hp1356.htm In addition, Treasury will invest $20 billion in Bank of America from the Troubled Assets Relief Program in exchange for preferred stock with an 8 percent dividend to the Treasury. Term sheet for equity: http://www.ustreas.gov/press/releases/reports/011609 bofa term sheet 2.pdf Term sheet for guarantee: http://www.ustreas.gov/press/releases/reports/011508bofatermsheet.pdf ****
Backstopping companies in excess of their market caps, genius!! It appears C won't make it out of this month. Isn't it time to start replacing the single digit midgets in the Dow?