The PP-CC game has gotten out of hand. The western wolrd banking cartel is going to have its ass handend to them if this this does not work out. The Yuan will become the reserve currency. The EUR has been gaining ground on the USD in the midist of the Eurozone crisis. The If the EUR/USD reaches 1.40 becuase of a bailout and concern over Euro exposure by BAC then Washington DC has been completly hoodwinked by the bankers. This is a classic set to fail buy the too big to fail. Run with the money and have the dumbass politicians explain why it happend. Doe it get any better? Welcome to Neo Fuedalism, Akuma
Unlikely. They overpaid for a worthless asset. If they had gotten it for free Jpm style it would have been okay. But merril didn't even own real-estate and bac could have gotten the bankers for nothing the next month and kept all the toxic assets off their sheets.
My view has been that the banks should decide how to best invest their deposit base, but the FDIC/FED should decide how much capital the banks should set aside for each activity. If banks want to use the depositors money to punt SPX futures then they should probably be allocating 20 dollars for every 1 that they risk. If they want to invest in the working capital of a AAA industrial firm, maybe $1 for ever $100 they give the firm. The banks can then determine their talent and the risk/reward of various investing activities. If BAC wants to use the deposits to fund those Meril swaps, they should put more capital than a mortgage (or maybe less based on the risk). It should be similar to the way insurance companies work. You have a certain limit on what you can invest in and if you generate a surplus then you are given more flexibility on that surplus.
Come on, you and I both know that if the aforementioned regulations were to be put in place, the already stressed banks would immediately be in peril. Even with the suspension of the MTM accounting from early 2009, we've got some problems, such as the one that started this thread. If all the "kid gloves" treatment can't clean up this mess, how the hell could some sort of real regulatory change clean this up WITHOUT first destroying the financial system?
If you noticed from the earnings Merrill is the only division that is saving BAC right now. Merrill earns more fees from ib activity than GS so it's a good buy in hindsight. They did pay too much for it but they had no choice really to pass on this deal.
The big banks are dead....don't bother to invest LONG TERM. Yeah, maybe for SWING trading. The US populace is UP IN ARMS....politicians must acknowledge this. Got an MBA ? Get ready to start diggin ditches. There is NO VALUE IN A FINANCE DEGREE today.