The Other McCain

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Obamanomics Helps Wall Street Fat Cats?

Posted on | August 24, 2011 | 9 Comments

Four years ago, Bank of America stock was trading above $50 a share. It’s now selling for less than $7 a share. And it may be worth a lot less like that:

The stock of a humongous American bank, Bank of America (BAC), is collapsing.
This is stoking fears that Bank of America will go bust, taking the whole economy down with it.
Why is Bank of America’s stock tanking?
Because the market thinks Bank of America is worth much less than Bank of America’s management says it is.
In fact, in what is fast becoming a formal law of bank-stock thermo-dynamics, the more the bank insists that everything’s fine, the more investors take this as a signal to run for the hills.

But Wall Street need have no fear — Tim Geithner is here!

There is a rumor circulated on Wall St. that JP Morgan will take over Bank of America within the week. The government will support the deal with a $100 billion investment in preferred shares issued by the combined entity. Alternatively, the government may guarantee the value of a large pool of Bank of America assets. The word is that Treasury Secretary Geithner has discussed the transaction with JP Morgan CEO Jamie Dimon.The “merger” would completely destroy the value of BAC’s common shares.

(Via Memeorandum.) So while Obama’s Treasury secretary bails out his big banker buddies on Wall Street, Obama and the Democrats are running around telling poor people to blame everything on Republicans and the Tea Party.


  • Anonymous

    Crony capitalism worked out fine, in the end, for Messerschmitt.  What’s the problem?

    d(^_^)b“Because the Only Good Progressive is a Failed Progressive”

  • Paul Joslin

    I’m in the “Stop the Looting, Start Prosecuting” camp myself.  Doesn’t matter if they go for the bankers or the feds first, as long as they get’m both.

  • Charles

    It will be hard to square such a deal with the no more bailouts rhetoric.

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  • Anonymous

    I suspect Geithner doesn’t have to go to congress for permission thanks to Dodd-Frank. They are way behind on writing regulations and developing procedures for implementing the new finance law. I suspect this regime would welcome an opportunity to experiment.

  • McGehee

    The Obama Re-Election Fund: Too Big to Fail™

  • Blacque Jacques Shellacque

    Why hasn’t Ken Lewis been lynched by the shareholders yet?

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  • Adjoran

    Banks can adapt easily to new rules and regulations, since they are able to pass their costs along to customers more easily than other businesses, especially those caused by new regulations, since the whole industry is switching over at the same time.

    Also, banking/finance only has the banking/finance rules to deal with, for the most part.  Other businesses have to comply with a wider range of regulations and agencies – EPA and state environmental laws, OSHA, NLRB, FTC, import/export, etc. – to worry about.

    So all the wild and crazy extra-legal regulation-writing Obama’s Regime is doing won’t hurt the banks at all, but the banks have never been a big engine of job creation.  Other businesses can’t deal with the uncertainty as easily.