David Kirkpatrick

January 21, 2009

Banking stocks and TARP …

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 5:40 pm

a bad, bad combination.

From the link:

New York University Professor Nouriel Roubini, who foresaw the credit crisis, heightened investors’ panic when Bloomberg reported on Jan. 20 that he estimated credit losses for U.S. firms could hit $3.6 trillion. Thus, the U.S. banking system—with just $1.4 trillion in capital—is “effectively insolvent,” Roubini said, according to Bloomberg. “The problems of Citi, Bank of America, and others suggest the system is bankrupt,” he added.

The supposed cure for this is the federal government’s $700 billion Troubled Assets Relief Program, or TARP, enacted late last year. However, a growing number of investors and analysts warn that the TARP program may come at a large cost to bank shareholders.

Banks get TARP relief only by giving the federal government preferred shares. On Jan. 16, BofA issued the government another $20 billion in preferred stock that pays an 8% dividend. In exchange, the government agreed to limit future losses on $118 billion in BofA investments, including a large amount of the portfolio acquired through BofA’s buyout of Merrill Lynch.

“Increased support by the U.S. government provides protection on certain problem assets,” notes Deutsche Bank (DB) analyst Mike Mayo, but “it also comes with more restrictions on [BofA] as a whole.”

6 Comments »

  1. well this is really bad. we must do something to overcome all these. but to be honest as citizen I even don’t know how and where to start.. If you can also lend me some ideas would be great.thanks

    Comment by Loan Modification — January 21, 2009 @ 7:46 pm

  2. The banks are rather being afraid of losing its money.
    But they do not want to help on the poor people .

    Comment by Loan modification — July 19, 2009 @ 2:02 am

  3. Its horrible that so many banks have accepted TARP funds but are not modifying the loans of homeowners in accordance with Making Home Affordable…

    Comment by loan modification — October 22, 2009 @ 5:43 pm

  4. That is why you need to receive help from a lawyer. Lenders will not help unless they are motivated to do so.

    Comment by Mortgage modification attorney — November 14, 2009 @ 3:33 am

  5. Loan modification consultants are great at helping you pass through all the application procedure. They can help you way more than what you pay them.

    Comment by Mortgage modification Lady — November 17, 2009 @ 5:45 am

  6. Nice postings! On the other hand, according to the most recent statistics the unemployment rate is over 10.2%. It looks like that the mortgage modification market and car loan industry are on their ways to recover. Mortgage modifications are high in demand as people face difficult situation financially in every corner of the country.

    Comment by Chip tuning — November 30, 2009 @ 5:03 am


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