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Old 01-15-2009, 03:40 PM   #1
Steve_A
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Default Citi Group to go.... Bank of America to follow

Hi Everyone,

It looks like the first half of the 700b bailout package served only to stave off the total collapse of the finacial market for a couple of months as stated in these forums last year.

The political game has started with the Reps. not wanting to release the second half of the package without a fight, which is ironic as they threatened martial law last year to hurry the measure through.

Although I agree that the second half should not be released, it's for other reasons, not poltical ones.

Citigroup is back to square one. Their stock is worth 4 bucks and shouldn't even be in the DOW top 50. There are rumours flying around that the US Government will buy Citigroup out and control the finance company. Last years bailout money has done absolutely nothing to help the company and it's not likely that the American population will see the colour of the bailout money ever again.

The Bank of America wanted money to buyout Merryll Lynch. Not going to happen. The money's gone and the debts of Lynch are far wider than first anticipated. Probably the Bank of America will go down. I'm keeping watch, but I will say yet again, take your money out of your account NOW!

Best regards,

Steve

Last edited by Steve_A; 01-15-2009 at 03:59 PM.
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Old 01-15-2009, 03:53 PM   #2
Dantheman62
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Default Re: Citi Group to go.... Bank of America to follow

NEW YORK (Reuters) - Stocks tumbled on Thursday as news of a push by Bank of America (BAC - News) for more government aid added to worries about mounting credit losses in the financial sector.

Shares of Bank of America, the largest U.S. bank, were a top drag on the Dow, with a drop of 27 percent to $7.44. Shares of Citigroup (NYSE:C - News) tumbled 23 percent to $3.49 a day before the bank was due to report its quarterly results and new strategic direction.

Investors feared a need for more government aid in the financial sector pointed to mounting credit losses as the year-long recession deepens. The S&P financial index (^GSPF - News) fell 7.6 percent.

"I think it's tremendously disappointing that the banks continue to flounder," said Carl Birkelbach, head of Birkelbach Management in Chicago.

"What's going on here is that the first batch of the (financial rescue bailout) funds was supposed to put out the fire, but now it looks like the fire is coming up again."
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Old 01-15-2009, 03:56 PM   #3
Dantheman62
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Default Re: Citi Group to go.... Bank of America to follow

WASHINGTON (AP) -- The federal government is considering a fresh multibillion-dollar aid package for Bank of America Corp. to help it absorb losses at Merrill Lynch.

Bank of America has received a total of $25 billion in capital injections from the Treasury bailout fund, called the Troubled Asset Relief Program, or TARP. That includes $10 billion for Merrill Lynch & Co., which Bank of America bought in a deal that closed Jan. 1.

In the Citigroup rescue late last year, the bank received a fresh $20 billion capital infusion from Treasury's bailout fund -- after earlier receiving $25 billion -- as well as government backing of billions in risky assets held by the bank
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Old 01-15-2009, 05:25 PM   #4
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Default Re: Citi Group to go.... Bank of America to follow

I just threw up a little
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Old 01-15-2009, 06:42 PM   #5
Northern Boy
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Default Re: Citi Group to go.... Bank of America to follow

Thanks Steve
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Old 01-15-2009, 07:05 PM   #6
peaceandlove
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Default Re: Citi Group to go.... Bank of America to follow

TARP Reform and Accountability Act

Source: Common Cause

Summary of the bill:
http://www.commoncause.org/site/pp.a...y&auid=4411535


TARP "Reform" Act only makes things worse

Source: http://www.campaignforliberty.com

Posted by Matt Hawes on 01/13/09

Representative Barney Frank, chairman of the House Financial Services Committee, has introduced H.R. 384, the TARP Reform and Accountability Act, which has bypassed normal committee procedures and could come up for a vote on the House floor as soon as tomorrow.

This legislation, an amendment to the TARP bill passed last fall, claims to:

...strengthen accountability, close loopholes, increase transparency, and require Treasury to take significant steps on foreclosure mitigation....

On the contrary, and as is standard operating procedure for the federal government, a bill posing as an effort to tighten oversight and increase accountability only further intensifies government manipulation of the market.

Here's a few of the harmful provisions lurking in the legislation:

- codifies the use of TARP funds to bail out auto manufactures and make loans to their financing arms. Congress opposed the use of the funds for this purpose during the TARP debate, and it must not be "read back" into the legislation.

- conditions use of the second $350 billion on the use of up to $100 billion, but no less than $40 billion, for foreclosure mitigation, with a plan required by March 15, 2009. Focus in on the phrase "no less than $40 billion." More government interference in the housing market to keep prices high.

- clarifies Treasury’s authority to establish facilities to support the availability of consumer loans, such as student loans, and auto and other vehicle loans. More government bureaucracies to supervise other bureaucracies.

- makes the increase in deposit insurance coverage for banks and credit unions to $250,000 permanent, when it was enacted temporarily as part of TARP and is scheduled to sunset on December 31, 2009. It includes an inflation adjustment provision for future coverage.

- increases the FDIC's borrowing authority from $30 billion to $100 billion and allows it to obtain sums in excess of $100 billion upon the FDIC's written request and the Treasury Secretary's approval on the basis that the additional amounts are necessary. If you said "way too much authority without Congressional approval," you guessed right.

Contact your representative today: https://writerep.house.gov/writerep/welcome.shtml and urge them to oppose H.R. 384 if it comes up for a vote.
Remind them that TARP was similarly rushed through the House and has not only failed to meet its objectives: http://www.chron.com/disp/story.mpl/...y/6150397.html,
but is nowhere near fully accountable: http://www.digitaljournal.com/article/264860.
Although the Frank bill is marketed as addressing these concerns, it needs to go through the regular committee markup process: http://en.wikipedia.org/wiki/Markup_(legislation).
It is only right that the Treasury and the Federal Reserve be required to lay out all their information on how previous TARP funds were dispersed before any further money is authorized or additional efforts made.





Last edited by peaceandlove; 01-15-2009 at 07:09 PM.
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Old 01-15-2009, 07:46 PM   #7
Dantheman62
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Default Re: Citi Group to go.... Bank of America to follow

Today's Outrage: Bank of America's Secret Backroom Bailout
Posted Jan 15, 2009 01:59pm EST by Henry Blodget in Investing, Recession, Banking, Election


In mid-December, the WSJ tells us, Bank of America (BAC) went to Hank Paulson and threatened that if he didn't give the firm another TARP bailout, they'd abandon the Merrill Lynch deal and cripple the financial system. Paulson then apparently spent more money he didn't have, promising that he would rescue BAC yet again. (This a month or so after an annoyed Ken Lewis said he didn't want or need the original TARP infusion).


There is only one word to describe this: Outrageous. Aaron and I discuss what happened in the accompanying piece with Joe Nocera, Business Columnist for the New York Times. Talking about the nation’s banking system, Nocera sums it up nicely: They’re “not on our side.”


BAC CEO Ken Lewis decided to buy Merrill Lynch. No one forced him to do it. If it was such a bad decision that it threatened to kill the firm, he should resign in disgrace (or, if he refuses to do so, he should be sacked). It's not as though he didn't have plenty of warning.


If Hank Paulson promised Bank of America more money, meanwhile, both he and BAC should have disclosed this immediately. This is highly material information. It's also NOT a private deal. It's a government deal. The public deserves to know about this instantly.


Taxpayers should be furious at how they and their money are being treated. Bank of America did not buy Merrill Lynch for the good of the country: It bought it because Ken Lewis thought, wrongly, that he was getting a deal. Ken Lewis should be held accountable for this. Hank Paulson, meanwhile, should immediately disclose exactly what this secret deal was, when he made it, and why.

Last edited by Dantheman62; 01-15-2009 at 08:13 PM.
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Old 01-15-2009, 08:17 PM   #8
Steve_A
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Default Re: Citi Group to go.... Bank of America to follow

Hi Everyone,

I have to say that initially I was suprised as much as the next man that the DOW got back in to positive territory today. Then I looked around and saw that today is President Bushs' farewell speech and the vote on whether to free the second half of the 700b.

The banks I mentioned earlier at the beginning of this thread painted a really rosy picture today, Citigroup saying that the rumour about the government take over is hogwash and the Bank of America saying it needs 'only 15b'.

I think the deal may have been done to deny the motion of not allowing the second part of the bailout money, as the directors of these two institutions who at the end of yesterday were crying for help, this afternoon are saying that the sun is shining and the sky is blue. I think they may have some priveleged info, which in itself is illegal, but hey, it's hard times. Right?

Once again I predict that the second half of the bailout being allowed, it will only stave off financial institution collapse for another month or so, as even the car makers are starting to look for more cash too.

Whichever way it goes, George W will have made his farewell speech on a high financial note (the DOW being positive). Next Tuesday is when the fun and games really start and I'm beginning to think that Barak is a little overwhelmed by his task in hand.

Let's wait and see.

Best regards,

Steve

Last edited by Steve_A; 01-15-2009 at 10:56 PM.
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Old 01-15-2009, 10:45 PM   #9
Anchor
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Default Re: Citi Group to go.... Bank of America to follow

Feburary will be a real pain at this rate. Its not like we didnt know about that though.
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Old 01-15-2009, 11:20 PM   #10
Colin
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Default Re: Citi Group to go.... Bank of America to follow

Quote:
Originally Posted by Steve_A View Post
Next Tuesday is when the fun and games really start and I'm beginning to think that Barak is a little overwhelmed by his task in hand.
..and let's not forget Powell & Biden both predicted that Obama would have some sort of major crisis to deal with in his early days in office(21st/22nd I think was the prediction)
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Old 01-16-2009, 05:40 AM   #11
DoctorWho
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Default Re: Citi Group to go.... Bank of America to follow

I claimed bankruptcy on credit cards with Bank of America and Citigroup in 2007. Glad I bucked the trend on those.
Bill "the Doctor"
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Old 01-16-2009, 10:18 AM   #12
Steve_A
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Default Re: Citi Group to go.... Bank of America to follow

Hi Everyone,

Well it seems that the second part of the bailout money was approved. Who'd have thought?

Bank of America Corp. will get 138b to secure the Merill Lynch deal, Bank of America will get 20b which is 5b more than they said they needed, which I thought was very generous of the government considering it's your money they're dealing with.

I think we can call this "Paulsons' last spalsh".

Ed Rogers chief executive officer of Tokyo-based hedge-fund adviser Rogers Investment Advisors said, "This is more short-term fire-fighting tactics". I tend to agree.

Today Citigroup and the Bank of America should release information about their last quarter earnings for last year.

Best regards,

Steve
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Old 01-16-2009, 04:21 PM   #13
Northern Boy
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Default Re: Citi Group to go.... Bank of America to follow

BAC has posted a loss and Citi group has split into 2 entities

http://finance.yahoo.com/news/Bank-o...-14082686.html


http://news.yahoo.com/s/ap/20090116/...arns_citigroup
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Old 01-26-2009, 10:37 PM   #14
Northern Boy
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Default Re: Citi Group to go.... Bank of America to follow

This just in from Martin Wiess Research Group

Warning: Megabanks Could Fail Despite Federal Aid
by Martin D. Weiss, Ph.D.
Dear Subscriber,


The time has come to issue one my sternest warnings to date: Bank of America and Citigroup could fail despite the most radical government rescues of all time.

Right now, after recent close calls with instant death, these two megabanks are on life support, receiving massive transfusions of government capital. But they're still hemorrhaging, and no one in Washington has found a cure.

Already, they have received capital injections of $90 billion ($45 billion each).

Already, this bailout is larger than the total combined capital of PNC Bank, Suntrust Bank and State Street Bank — all among America's ten largest.

Yet, ironically, that $90 billion is still a drop in the ocean compared to their massive exposure to risky assets.

The shocking facts revealed in the banks' own balance sheets and in the OCC's Quarterly Report demonstrate the enormity of problem:

Massive Risks at America's Megabanks
(bill. of dollars)
B of A Citi B of A + Citi JPM
9/30/2008
Total assets 1,831 2,050 3,881 2,251
All derivatives 38,186 39,979 78,165 91,339
Credit default swaps 3,291 2,467 5,758 9,250
Exposure to defaults by trading partners 177.6% 259.5% 400.2%


Fact #1. Too big to save. Bank of America Corp. and Citigroup, Inc. have combined assets of $3.9 trillion, or 43 times the size of the Treasury bailout funds they've received to date.

Fact #2. Bigger losses ahead. Even before any further declines in the economy, an unusually large portion of their assets are already in grave jeopardy — commercial real estate loans going sour, credit cards loans tanking, auto loans sinking, and residential mortgages turning to dust. Now, as the economy continues to tumble, avoiding much larger losses will be almost impossible.

Fact #3. Big derivatives players. Bank of America and Citigroup are the nation's second and third largest high-rollers in the derivatives market, with a combined total of $78 trillion in these bets outstanding. That's over ten times the derivatives that Lehman Brothers had on its books when it failed last year.

Fact #4. They've bet far too much on each other's failure. Bank of America and Citigroup are also the second and third largest participants in the most dangerous derivatives of all — credit default swaps. These are the big bets that financial institutions make on the failure of other major companies.

But participants in this market are like shipwrecked sailors in a sinking lifeboat betting fortunes on who will live and who will survive: If a company bets too heavily on failures and too many companies actually fail, who's going to make good on those bets?
And unfortunately, betting on each other's demise in huge amounts is exactly what the nation's megabanks have done. At their latest reckoning, Bank of America and Citigroup held credit default swaps with notional values of $2.5 trillion and $3.3 trillion, respectively. (See OCC report, pdf page 23.)

Total between the two: An astounding $5.8 trillion!

This number is not directly comparable to capital. But just to give you a sense of the magnitude of the problem, Bank of America and Citigroup's combined credit default swaps are more than sixty times larger than the $90 billion they've received so far in capital infusions from the Treasury Department.

Fact #5. JPMorgan Chase is not far behind. Right now, Washington and Wall Street are still counting on at least JPMorgan Chase to pick up the pieces after major failures and shotgun mergers.

But according to the OCC, among the three megabanks, JPMorgan Chase is actually the most heavily leveraged, with over 400% of its capital already exposed to the risk of default by trading partners. Bank of America's and Citigroup's exposure (177.6% and 259.5%, respectively) is also wild, but JPMorgan Chase's exposure is obviously far greater.

Fact #6. JPMorgan Chase's derivatives could double the size of the banking crisis overnight. On the day that JPMorgan Chase needs to join the ailing Bank of America and Citigroup in Uncle Sam's intensive care unit, the derivatives mess doubles immediately.


Reason: The bank has $9.2 trillion in credit default swaps, almost twice as much as Bank of America and Citigroup combined.

Fact #7. Stocks crashing. Shares in failed banks are worth zero, and that's where Bank of America's are headed. Citigroup's are already close, making it almost impossible for the company to raise capital from investors.

In light of these facts, how can the government save America's megabanks?

Wall Street is hoping that the Obama administration will create a separate, government-run "bad bank" to take bad assets off their hands. And some pundits are even proposing that the U.S. government nationalize the big banks in trouble. But ...

Neither approach addresses the obvious reason our nation's banks are in the ICU to begin with: Excess debts and risk-taking. In fact, these "solutions" would merely pile on more of the same. Meanwhile ...


Both approaches spread and transform the contagion from a Wall Street debt crisis into a Washington debt crisis, as the federal deficit explodes to as much as $2 trillion in fiscal 2009.
My Forecast: Washington Will
Ultimately Lose This Epic Battle!

No matter what the government does, it cannot patch back together the busted market for mortgages, derivatives and especially credit default swaps.

It cannot stop a pandemic of loan losses among large AND small banks as the economy sinks and traditional bank lending goes bad.

It cannot stop the contagion of falling confidence, fear and panic. It cannot outlaw gravity or stop investors from selling. Nor can it turn back the clock and reverse years of financial sins.

So don't count on Uncle Sam to save your bank, your business, or the economy.

Keep up to 90% of your money in cash.

Avoid bank deposits as much as possible, using mostly short-term Treasury bills or equivalent.

Above all, focus on building up your own resources and finding alternative sources of income or profits. For specific instructions on precisely how, click here for our comprehensive report.

Good luck and God bless!

Martin
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