Posts Tagged ‘bank rescue’

Bank of America propped up like Citicorp

January 18, 2009

The feds have gotten smarter about how they takeover failed banks. Indymac failed the old fashion way and Lehman Brothers went bankrupt. The feds engineered a fire sale for WAMU in a deal with JP Morgan and it went on the books as a failed bank. Since then, they have avoided the failed bank approach with Citicorp and now I believe with Bank of America. Its probably a good way to avoid panic but aren’t they hiding the true costs of the meltdown from the public and won’t we be surprised some day in the future when they total up the bill and come collecting? The Bank of Americas will have smart lawyers to avoid the tax bills that the rest of us end up paying. Here is the latest press release that sound pretty much the feds have put BofA on life support:

The U.S. government agreed to invest $20 billion more in Bank of America Corp. and guarantee $118 billion of its assets to help the lender absorb Merrill Lynch & Co. and prevent the financial crisis from deepening.

The government agreed to the rescue “as part of its commitment to support financial-market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement shortly after midnight in Washington.

Bloomberg article