FanboyOf91
January-16th-2009, 01:44 AM
No surprise they needed another bailout. Merrill Lynch had a ton of financial derivatives.
http://www.nytimes.com/2009/01/16/business/16merrill.html?_r=1&hp
Two weeks after closing its purchase of Merrill Lynch at the urging of federal regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction.
The bank had been pressing the government for help after it was surprised to learn that Merrill would be taking a fourth-quarter write-down of $15 billion to $20 billion, according to two people who have been briefed on the situation, in addition to Bank of America’s rising consumer loan losses.
The second lifeline brings the government’s total stake in Bank of America to $45 billion and makes it the bank’s largest shareholder, with a stake of about 6 percent.
The program is modeled after a larger one engineered to stabilize Citigroup (http://topics.nytimes.com/top/news/business/companies/citigroup_inc/index.html?inline=nyt-org) as its stock price plummeted in late November, but it appears to have had limited success. Under the terms, Bank of America will be responsible for the first $10 billion in losses on a pool of $118 billion in illiquid assets, including residential and commercial real estate and corporate loans, and that will remain on its balance sheet.
The Treasury Department and the Federal Deposit Insurance Corporation (http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_deposit_insurance_corp/index.html?inline=nyt-org) will take on the next $10 billion in losses. The Fed will absorb 90 percent of any additional losses, with Bank of America responsible for the rest.
In exchange for the new support, Bank of America will give the government an additional $4 billion stake in preferred stock. It has also agreed to cut its quarterly dividend to a penny, from 32 cents, accept a loan-modification program and put more stringent restrictions on executive pay (http://topics.nytimes.com/top/reference/timestopics/subjects/e/executive_pay/index.html?inline=nyt-classifier).
The F.D.I.C. announced separately that it would soon propose to extend its guarantee on supporting new consumer lending to 10 years, from 3 years.
....
http://www.nytimes.com/2009/01/16/business/16merrill.html?_r=1&hp
Two weeks after closing its purchase of Merrill Lynch at the urging of federal regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction.
The bank had been pressing the government for help after it was surprised to learn that Merrill would be taking a fourth-quarter write-down of $15 billion to $20 billion, according to two people who have been briefed on the situation, in addition to Bank of America’s rising consumer loan losses.
The second lifeline brings the government’s total stake in Bank of America to $45 billion and makes it the bank’s largest shareholder, with a stake of about 6 percent.
The program is modeled after a larger one engineered to stabilize Citigroup (http://topics.nytimes.com/top/news/business/companies/citigroup_inc/index.html?inline=nyt-org) as its stock price plummeted in late November, but it appears to have had limited success. Under the terms, Bank of America will be responsible for the first $10 billion in losses on a pool of $118 billion in illiquid assets, including residential and commercial real estate and corporate loans, and that will remain on its balance sheet.
The Treasury Department and the Federal Deposit Insurance Corporation (http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_deposit_insurance_corp/index.html?inline=nyt-org) will take on the next $10 billion in losses. The Fed will absorb 90 percent of any additional losses, with Bank of America responsible for the rest.
In exchange for the new support, Bank of America will give the government an additional $4 billion stake in preferred stock. It has also agreed to cut its quarterly dividend to a penny, from 32 cents, accept a loan-modification program and put more stringent restrictions on executive pay (http://topics.nytimes.com/top/reference/timestopics/subjects/e/executive_pay/index.html?inline=nyt-classifier).
The F.D.I.C. announced separately that it would soon propose to extend its guarantee on supporting new consumer lending to 10 years, from 3 years.
....