CNBC is reporting and I will add the links as they become available that the Federal Reserve, FDIC and the Treasury Department will provide 100-200 in fresh guarantees to help keep Bank of America from imploding. This new program is reported to follow the Citi deal from November. That deal included 300+ billion in loan guarantees, 25 billion in direct cash infusion and other measures from the federal reserve in swapping so called toxic assets for treasury bills.
http://www.cnbc.com/
UPDATE: Here is the link to the follow up by CNBC. The extracts follow at the end of the diary.
http://www.cnbc.com/...
And here is the link to the video of the announcement on CNBC.
http://www.msnbc.msn.com/...
And here is a lead in from earlier today.
http://www.msnbc.msn.com/...
The share price of Bank of America has fallen from $25.00 in November to a low of $7.50 on the intra-day trade today with the stock price having declined by 25% earlier ion today's trade as investors become spooked by news that B of A needed additional federal support to close their purchase of Merrill Lynch. The markets today were down almost 200 points as investors fared that the problems at Bank of America might spread to other banks.
http://www.cnbc.com/...
Wall Street began the day nervous that the money given to banks might have prevented a collapse of some companies but has done little to repair their balance sheets. The federal government is considering a fresh multibillion-dollar aid package for Bank of America to help it absorb losses at Merrill Lynch, according to a person with knowledge of the discussions, who spoke to The Associated Press on condition of anonymity because of the sensitive nature of the discussions. The person said the new aid package could be modeled along the lines of the financial lifeline that was thrown to Citigroup Inc. in November.
http://finance.yahoo.com/...
On top of this news we learn today of a law suit in New Hampshire concerning B of A mortgage unit, Countrywide. The information uncovered in this suit is simply breathtaking in its scope and meaning for millions of Americans attempting to negotiate in good faith with their mortgage lender.
In marketing, advertising and testimony before Congress, Countrywide Home Loans has said repeatedly that it is working hard to modify the mortgages of financially strapped borrowers caught up in the subprime meltdown. But in a New Hampshire court, attorneys for the lending giant are singing a different tune, describing such assurances as "mere commercial puffery."
Saying the modification offers are "only Countrywide’s vague advertisements," attorneys for the lender are asking the court to throw out a lawsuit alleging breach of good faith, fraud, negligence and misrepresentation, which was filed on behalf of a family that was refused a loan modification by the California-based company.
"It’s breathtaking," attorney Mary Frances Stewart of Concord, N.H., said of Countrywide’s response to the lawsuit she and co-counsel Krista Atwater filed in Merrimack County Superior Court. In its response, "Countrywide is saying, ‘We don’t have any obligation or even necessarily the intention of actually modifying these loans,’ and yet they’re representing that they do."
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The inability of many troubled borrowers to get viable modifications of mortgages they can no longer afford is seen by many economists as major impediment to a solution to the mortgage crisis, which is expected to result in more than 2 million home foreclosures this year.
http://www.msnbc.msn.com/...
When I worked for the Department of Justice a common refrain from bank robbers was that if you were going to rob a bank it was best to own it first and this story gives credence to that thought process. So, now that B of A is in trouble with all of their toxic waste the government has determined that they along with Citi and AIG before them are "too big to fail" and need additional billions from us. The very same folks that these banks have swindled over these past few years.
I'll add more as it becomes available. However, I am just beyond comprehension how our elected leadership believes that the best way to deal with folks that commit fraud on a massive scale is to use the money from those that have been defrauded to make their fraudulent conduct whole.
UPDATE: Here is the link to the follow up by CNBC.
http://www.cnbc.com/...
Bank of America may receive another $15 billion in government aid to help absorb Merrill Lynch, but shares of the bank and Citigroup fell Thursday on worries over their ability to handle soaring credit losses.
President Bush and President-elect Obama have signed off on the new aid for the largest U.S. bank, which is expected to include government guarantees, the source said. CNBC reported that the guarantee would be between $100 billion to $200 billion.
Bank of America sought the aid to absorb growing credit losses at Merrill, which it bought on Jan. 1. Both Bank of America and Treasury declined to comment.