"I'm SHOCKED!"
Posted on 09/08/2011 1:28:37 PM PDT by Neidermeyer
It was only a matter of time. A few weeks after every money losing firm in the US and the kitchen sink disclosed it would sue Bank of America in an accelerating attempt to salvage something through litigation, the worst case scenario for Brian Moynhian just got real. As of minutes ago, Norway's Government Pension Fund, which is another name for its Sovereign Wealth Fund, has just announced it is suing Bank of America for mortgage fraud. Not only that but it is also going after Countrywide, obviously, but far more importantly, is also suing KPGM, the auditor on the Countrywide transaction, and, drumroll, ole' Agent Orange himself. If US bank analysts were busy quantifying the damages from every bank in the US suing BofA, just wait until the calculation is expanded to included every firm that bought mortgages from Bank of America... ever...in the entire world.
(Excerpt) Read more at zerohedge.com ...
Too Big To Fail...or not....???
Hopefully it will come to light before next November.
..better git them der messigans to pay off their cards early
I’ve been waiting for this sort of stuff ever since the Iceland thing broke years ago.
Problem is, I consider this a furtherance of our exponential drop to the mother of all world financial meltdowns.
It just gets worser & worser.
29thday.org
I don't think so...just more scare-mongering. The bank will be fine.
I don't think so...just more scare-mongering. The bank will be fine.
Obama had to destroy the bank to save the bank....
I don’t know if it matters, but perception is key to many things.
Bank of America was founded AS, and really still IS, BANK of ITALY.
A.P. Giannini founded the Bank of America as the Bank of Italy in San Francisco as “the people’s bank.” I just imagine old A.P. is spinning in his grave over what has become of his child.
IMHO, Buffett received assurances from Obama that he would see that Buffett does not lose his $5 billion investment in BOA.
Or at least Buffett is betting on that.
It certainly smells like a bailout could be coming for BOA.
European banking problems will cause “global” pain at some point, I don’t know when.
But BOA could be hurt by them, I don’t know how much. At least, if obama wanted to claim that was the justification for bailing out BOA, that claim could be made.
The Buffett investment is what has me curious. He has a lot of shareholders that gather at the big annual shareholder celebration. They would not like to lose that $5 billion.
The thing looks curioser and curiouser.
Buffet got a new issue of “preferred” shares that receive a really nice dividend ... I wouldn’t be the least bit surprised if those shares weren’t “Convertible” to bonds/debt after only a short holding period so he can be maneuvered into an ownership position when BAC fails. Buffet kinda owed Obama/Geitner something after the last Wall Street bank deal he was brought in on .. Goldman Sachs ,, was essentially a “gimme” , Geitner engineered TARP right after that giving Warren a windfall.
The smell I smell could also be BOA being sacrificed.
Buffett’s getting 6%, convertible to Common, worthless in the case of insolvency.
From seeking alpha...
50,000 preferred shares worth $100,000 each that pay a 6% annual dividend, and warrants to purchase up to 700 Million shares of Bank of America at an exercise price of $7.14287. The preferred shares will pay a dividend on a quarterly basis, and can be redeemed by Bank of America at any time for a 5% premium. The options have a life span of 10 years, and can be exercised at any point during that period.
In response to the deal, Mr. Moynihan had the following to say:
We are building the best franchise in financial services and we have laid out a clear plan to deliver long-term shareholder value. I remain confident that we have the capital and liquidity we need to run our business. At the same time, I also recognize that a large investment by Warren Buffett is a strong endorsement in our vision and our strategy.
What is being implied by Mr. Moynihan is that Bank of America needed confidence more than capital, and BofA was willing to pay Warren Buffett and Berkshire Hathaway to get it. To further prove that Bank of America is paying a premium for Mr. Buffett’s name, you just have to go back to July 7th when the bank sold $2.5 Billion worth of 5 year bonds paying 3.75% , a 225 basis point discount to the yield on the deal. In conclusion, it pays to be Warren Buffett, and by proxy a Berkshire Hathaway shareholder.”
...end of quote.
On the other hand, it could mean that BOA can’t make another bond sale like it did in July. It may simply mean that Buffett approached them in his usual way with an offer. At the end of the day, in exchange for getting fresh capital and his name association, they’re paying an interest rate 60% higher than they did in July.
The real Crash has to come. It is baked in the cake. The longer it is deferred the worse it will be when it happens. If we put it off much longer we might get to the point that such old forgotten conditions as famine right here in America might be the result.
The concept of To Big To Fail is a surety that the failure, when it comes, will be of tremendous proportion.
Ken Lewis was the CEO during most of the mortgage issues.
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