There is a plethora of speculations buzzing around Wall Street with the central theme being Bank of America (NYSE: BAC) our nation’s largest bank…and biggest “cleaner upper” of the financial crises buying both Merrill Lynch and Countrywide Home Loans before they collapse…is going to get “taken over” by the government.
Oh my God!
The sky is falling…the sky is falling.
Everyone seems to think this could trigger the failure of the “whole banking system” (heard that tune before) and signal to the world our currency and debt are not worth holding.
In a Bloomberg report, Paul Miller, analyst at Friedman, Billings, Ramsey Group Inc said,
“You have got to nationalize the banks,” … “We’re past the tipping point, and the government is taking small steps.”
Tons of Bailout Money…For What Exactly?
Bank of American was one of the first recipeints of at least $25 Billion of TARP bailout money last year. This year they were recently given more assistance in the form of another cash infusion of $20 billion and a $118 billion plan to off-load losses in mortgages, corporate loans and derivatives to Uncle Same.
All this massive amount of government help ..check that…TAXPAYER help…and BAC stock continues to freefall below $5 this week!
We had to “nationalize” the GSEs, Fannie Mae and Freddie Mac, because for decades we gave an “implied’ but still meaningful guarantee on those MBSs to every central bank around the globe to get them to buy our debt. Defaulting on that would truly be a signal to the world to stop being our bankers.
Letting BofA fail would not even come close to having the same effect regardless of what you hear.
Don’t Nationalize Them…Let Them Fail
Don’t “take them over”, just let them fail…file bankruptcy…whatever. Everybody knows they have a zero balance sheet anyway…which is why there stock is headed to the basement.
How many more billions of taxpayer dollars to want to throw down a rat hole just to save a “brand”…a private brand at that?
The earth didn’t stop revolving when IndyMac died…or any of the dozens of failed regional banks, so what’s good for the goose is good for the gander.
In this case, I think it might good to signal to the world that when you make bone-headed mistakes like taking over an investment firm that loses $15 billion a quarter and whose CEO spends $1.2 million on an office redecoration in the middle of a banking crisis, you need to die too…
Treasury Secretary NOT To The Rescue
So, Mr. Giethner, your first real move as Treasury Secretary, should be to let Bank of America fail. I see this week you resisted the idea of an aggregator bank which I thought was a horrible idea…so at least I know you can read.
Read this…and don’t bailout BofA. They are not “too big to fail” …they are too stupid to survive.
Sure your predecessor tossed a bundle of dough at them, hundreds of billions in fact. But he worked for Bush. We’d expect that from “those guys”. Don’t make his mistake. Let the world know it’s not “business as usual” at the Treasury.
Let them die!