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Obama: BoA Needs $33.9B More Capital

From an elated New York Times:

Bank of America Needs $33.9 Billion Cushion, U.S. Says

By LOUISE STORY and ERIC DASH

May 6, 2009

The government has told Bank of America it needs $33.9 billion in capital to withstand any worsening of the economic downturn, according to an executive at the bank.

If the bank is unable to raise the capital cushion by selling assets or stock, it would have to rely on the government, which has provided $45 billion in capital through the Troubled Asset Relief Program.

It could satisfy regulators’ demands simply by converting non-voting preferred shares it gave the government in return for the capital, into common stock.

But that would make the government one of the bank’s largest shareholders.

Executives at the bank, one of the largest being examined, sparred with the government over the amount, which is higher than executives believed the bank needed

The Treasury Department declined to comment on Tuesday evening.

Citigroup, by contrast, has already decided to allow the government to convert some of its investment into common stock.

Under the arrangement worked out between the Treasury and Citigroup earlier this year, the Treasury will receive mandatory convertible preferred shares, meaning preferred shares that can be converted to voting shares of common stock at the will of the government.

If Bank of America relied on that conversion for the majority of the capital it needs to maintain, the government would become one of the bank’s largest shareholders

Obviously the real goal here is for the government to get that much deeper into the banks and the financial markets.

This article was posted by Steve on Wednesday, May 6th, 2009. Comments are currently closed.

7 Responses to “Obama: BoA Needs $33.9B More Capital”

  1. BannedbytheTaliban says:

    In a just and open market they should be allowed to fail. After all they have a bad business model of giving away money to illegal immigrants with no credit, no social security number, no way of tracking them down or holding them accountable for the debts they incurred. But I guess that is the real reason why the Obama administration needs them to stay afloat. Put a public face on government handouts to illegals.

    Businesses meet immigrants’ needs

    Illegal immigrants can qualify for mortgage loans, buy health insurance, set up checking accounts, check out library books and make monthly payments on kitchen appliances.

    …Bank of America, the nation’s largest consumer bank, regularly opens accounts for Mexican immigrants who lack a Social Security card but can provide an identification card issued by Mexican consulates, known as a matr’cula consular.

    …The consulate in Raleigh issued 23,553 matr’culas last year, 30 percent more than two years earlier. Most people who apply for the card are illegal immigrants, said Karla Ornelas, the consulate’s deputy counsel.

    http://www.newsobserver.com/102/story/414815.html

    • pdsand says:

      I was going to say something about that but you beat me to it. I assume since the U.S. government would be a large shareholder, that BoA would be forced to stop aiding and abetting illegal aliens in conflict with U.S. immigration law, and the patriot act.

  2. Right of the People says:

    It must be amount that Barry’s posse needs to take the bank over without a hassle.

    Banned, unfortunately the banks are not allowed to inform the authorities of any irregularities concerning the “customers”. My wife works in a risk assessment division of a bank and the stuff she sees makes her cringe but she’s not allowed to do anything about it. I’d love to take the info about some of these scum and give it to our Intel unit here at the BP but I can’t because she could get sued. The banking laws are such that if you have valid ID you can open an account.

  3. proreason says:

    “it needs $33.9 billion in capital to withstand any worsening of the economic downturn”

    Whoa there, just a minute now. How can this be.

    I thought the Obamy miracle was turning the economy around. Isn’t that what we paid $870 billion (before interest and add-ons) for a couple of months ago?

  4. pdsand says:

    The $33.9 billion is to pass the “stress test” so that BoA can comply with TARP. I don’t recall if BoA is one of the banks that wants to get out of TARP or not, but if they were, it seems that basically the government is trying to wrangle them into making the TARP big-brother situation worse in order to get out of TARP. What a wonderful catch-22.

    • heykev says:

      exactly ps and it’s also a wonderful way for our Dear Leader to get preferred stock and voting rights to BoA.

  5. MinnesotaRush says:

    “It could satisfy regulators’ demands simply by converting non-voting preferred shares it gave the government in return for the capital, into common stock.”

    “But that would make the government one of the bank’s largest shareholders.”

    And didn’t o-blah-blah just tell us he doesn’t want to be running these companies .. in these businesses.

    Yeah! Righhht! I’d be willing to bet that he and the mrs roar in laughter and even disbelief that this “remaking of America” is really so simple.

    THEY .. haven’t got a clue (or a care) of the damage that their misguided ways are going to bring .. are bringing. They are simply NOT that astute or knowledgeable. They live, breathe, and think they’re finally in a liberal utopia.


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