My account advisor told me they had taken all the losses into account when they purchased Countrywide Mortgage, and everything would come up roses. I personally warned her that she and they shouldn't get too comfortable or smug with that attitude. These exchanges with BOA began all the way back to 2007, when the first rumors of the Countrywide deal started, culminating in my final warning given early October 2008 after the Merrill Lynch buyout talks. In fact, it was the very morning around 11am when we spoke, and later that evening BOA stock dropped over 33%. It continued to drop over the next 8 days by 50% (Oct 1; $38.13, Oct 9; $19.63). My advisor hasn't called me since...and BOA stock now stands at $7.18 a share (Jan 17, 2009).
"Too Big to Fail", Who? Them, or us? How many more bailouts can we afford? In truth, we taxpayers couldn't & cannot afford any of them. The fallout continues for our businesses, banks & government from stem to stern with no end in sight. Currently, the total taxpayer liability for all the losses now exceeds $2Trillion. My open wallet to our government went dry, musty & dusty a long time ago. The next pound of flesh they come after will require painful, but unproductive, surgery...yours too.
_____________NEWS__________________
For Bank of America, the Pressure Mounts Over Merrill Deal
Just months ago, Kenneth D. Lewis was the triumphant hero.
Today, he is struggling to defend a controversial conquest that now threatens the mighty empire he built at Bank of America.
Hours after the bank received a new government bailout to cover heavy losses at its Merrill Lynch subsidiary, Mr. Lewis came under fire Friday from investors wanting to know why the bank did not notify them of Merrill’s losses in December, when the bank told the government it would need additional support to ensure the merger would survive.
Merrill Lynch reported a devastating $15.3 billion loss in the fourth quarter, its last quarter before the merger closed. Those losses came atop Bank of America’s own $1.79 billion loss last quarter, as the nation’s largest consumer bank suffered from credit card, mortgage loan and commercial real estate problems. The shares closed at $7.18, down 13.7 percent. In a conference call with analysts, Mr. Lewis found himself fending off a barrage of questions about what he knew of Merrill Lynch’s losses, and when he knew it.
"The question is, When did Merrill Lynch know they had these losses? A lot of times companies would disclose losses of that magnitude,” said Michael Mayo, an analyst at Deutsche Bank. “This was dramatic."
Mr. Lewis told analysts that he was surprised to learn in December, three months after the bank snapped up Merrill Lynch in a shotgun deal, that the magnitude of losses at the brokerage was far greater than expected. He said he had considered walking away from the deal at that point, but was persuaded not to, partly by regulators who feared that a failure to seal the deal could set off a new round of panic in the markets.
The decision to stick with Merrill despite its problems, he said, was patriotic. “I do think we were doing the right thing for the country,” Mr. Lewis said.
But that may not be the right thing for the bank’s shareholders, who were already upset that Mr. Lewis appeared to have overpaid to achieve his dream of dominating the brokerage business.
In September, when the deal was inked, Mr. Lewis said he had been willing to pay more than $50 billion in stock, or $29 a share, for a company whose stock was in free fall because Merrill Lynch was “more likely than not” to survive the current turmoil. He said he had not wanted to wait to make a discount bid and risk losing the opportunity to buy the wealth management giant.
“Merrill had the liquidity and capacity to see this through,” Mr. Lewis said at the time.
In the months after the merger, however, financial markets deteriorated more brutally. The bank’s shareholders voted on the merger on Dec. 5. And while the full extent of Merrill’s fourth-quarter losses might not have been fully known then, had shareholders had an idea of the extent of the losses, they may have agitated for the deal price to be renegotiated.
Mr. Lewis said he had considered trying to renegotiate the price once he learned the extent of Merrill’s losses. But he feared that the length of time required for a new shareholder vote would put Merrill and the markets at risk. More important, he said, the government did not want to risk new turbulence in financial markets if the deal were to be delayed.
“In recognition of the position that Bank of America was in, both the Treasury and the Federal Reserve gave us assurance that we should close the deal and that we would receive protection,” Mr. Lewis said.
Some analysts said it was not possible for Merrill and Bank of America to know how much those assets would plummet in value.
“The fourth quarter of last year may go down as the worst quarter of capital markets in a century,” said David Fanger, a senior vice president at Moody’s Investors Service. “You can’t predict what the market’s going to do, so even if you know your positions you’re not going to know the total figure.”
But Stuart Plesser, a banking analyst with Standard & Poor’s Equity Research, said that by his estimates, Bank of America would not have needed the additional government capital without Merrill’s problems. He said the bank could have cut its dividend in half to cover its capital needs. The situation, he said, “doesn’t seem to be a good deal for shareholders at all.”
Also unanswered was why Bank of America explained only about $9 billion of Merrill’s write-downs. There are also write-downs of at least $4 billion in Merrill’s fixed-income unit. Those marks could be related to trades that were put on in recent months. A spokesman for Bank of America declined to comment.
Mr. Lewis, famous for his hulking acquisitions in recent years, has long coveted Merrill. He considered buying the firm about a year ago, but he backed away because it had not yet cleaned out the bulk of its troubled mortgage bonds. But in September, when Merrill came calling, Mr. Lewis decided to take the plunge.
Hastily arranged deals often have escape clauses, according to banking experts. Bank of America included a provision that would have allowed it to opt out of the deal should a material adverse change occur. But changes in the values of investments do not apply if they were valued correctly at the time of the deal. The bulk of Merrill’s write-downs come from assets like mortgage bonds and commercial real estate, which have been stuck on its books for more than a year.
“No matter what they do, they’re going to get sued, and the basis of the lawsuit is ‘you didn’t tell us,’ ” said Nell Minow, editor of the Corporate Library. “When it goes up you should’ve told us it was going to go up, when it goes down you should’ve told us it’s going to go down.”______________________
Two U.S. banks fail, first casualties in 2009
WASHINGTON (Reuters) – Bank regulators closed two small banks on Friday, the first U.S. banks to fail this year but the latest in an upsurge that began last year as the struggling economy and falling home prices took their toll on financial institutions.
The Federal Deposit Insurance Corp said National Bank of Commerce of Berkeley, Illinois and Bank of Clark County of Vancouver, Washington were closing with other banks taking over their insured deposits.
In 2008, 25 banks were seized by officials, up from just 3 in 2007.
National Bank had $430.9 million in assets and $402.1 million in deposits, with Republic Bank of Chicago assuming its insured deposits, the FDIC said. Republic Bank will also purchase $366.6 million in assets at a discount of $44.9 million, it added.
Umpqua Bank, a subsidiary of Umpqua Holdings Corp (UMPQ.O), agreed to assume insured deposits of the Bank of Clark County, which had $446.5 million in assets and $366.5 million in deposits, the FDIC said.
The FDIC insures up to $250,000 per account through 2009 and individual retirement accounts at insured banks.
But Bank of Clark County had about $39.3 million in uninsured deposits in 138 accounts that may exceed the insured limit, the FDIC said. It added that "is likely to change once the FDIC obtains additional information from these customers."
Bank of Clark County will reopen on Tuesday as branches of Umpqua Bank. The FDIC said customers at National Bank should continue to use existing branches until Republic Bank can fully integrate National's deposit records.
Customers at both National Bank and Bank of Clark County can access their money over the weekend by check, teller machine or debit card, the FDIC said.
National Bank's failure will cost the FDIC Deposit Insurance Fund $97.1 million while Bank of Clark County's failure will cost between $120 and $145 million, it said.
During the current financial crisis, Seattle-based lender Washington Mutual became the biggest bank to fail in the U.S. history. It was closed in September while suffering from losses from soured mortgages and liquidity problems.
The FDIC agency also has a running tally of problem banks that its examiners closely monitor. At the end of the third quarter, 171 undisclosed institutions were on that list.
More details on Friday's bank failures are posted on the FDIC's website at http://www.fdic.gov/bank/individual/failed/commerce.html and http://www.fdic.gov/bank/individual/failed/clark.html.
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Poll:1 in 3 'Christians' say 'Jesus sinned'
Barna poll shows adults develop their own beliefs
Posted: January 16, 2009
11:40 pm Eastern
By Bob Unruh
WorldNetDaily
 |
Half of Americans who call themselves "Christian" don't believe Satan exists and fully one-third are confident that Jesus sinned while on Earth, according to a new Barna Group poll.
Another 40 percent say they do not have a responsibility to share their Christian faith with others, and 25 percent "dismiss the idea that the Bible is accurate in all of the principles it teaches," the organization reports.
Pollster George Barna said the results have huge implications.
"Americans are increasingly comfortable picking and choosing what they deem to be helpful and accurate theological views and have become comfortable discarding the rest of the teachings in the Bible," he said.
"Growing numbers of people now serve as their own theologian-in-residence," he continued. "One consequence is that Americans are embracing an unpredictable and contradictory body of beliefs."
The results are a dramatic departure from the nation's foundings, when leaders held prayer meetings in the halls of Congress and attributed to Almighty God the victory in the Revolutionary War.
Barna noted the millions of people who describe themselves as Christian and believe Jesus sinned, or those who say they will experience eternal salvation because they confessed their sins and accepted Christ as their savior, "but also believe that a person can do enough good works to earn eternal salvation."
Barna's private, non-partisan, for-profit research group in Ventura, Calif., has been studying cultural trends since 1984. For this study, the organization randomly sampled 1,004 adults across the continental U.S. The study has a margin of error of 3.2 percent at the 95 percent confidence level.
For the study, "born-again Christians" were defined as people who said they had made a personal commitment to Jesus Christ that was still important in their life today and who also indicated they believed that when they die they will go to heaven because they had confessed their sins and had accepted Jesus Christ as their savior. The results highlight the significant shift in beliefs held by Americans, the study said.
"For much of America's history, the assumption was that if you were born in America, you would affiliate with the Christian faith," the report said. Now however, "half of all adults now contend that Christianity is just one of many options that Americans choose from and that a huge majority of adults pick and choose what they believe rather than adopt a church or denomination's slate of beliefs."
Fifty percent of Americans believe Christianity no longer has a lock on people's hearts. Two-thirds of evangelical Christians (64 percent) and three out of every five Hispanics (60 percent) embraced that position, making them the groups most convinced of the shift in America's default faith.
In contrast, the poll showed the importance of belief was growing along with the number of options about what to believe.
"By an overwhelming margin – 74 percent to 23 percent – adults agreed that their religious faith was becoming even more important to them than it used to be as a source of objective and reliable moral guidance."
Forty percent of respondents who do not affiliate with Christianity confirmed the increasing influence of their beliefs.
The result "underscored the fact that people no longer look to denominations or churches to offer a slate of theological views that the individual adopts in its entirety," the report said.
By a margin of 71 percent to 26 percent adults "noted that they are personally more likely to develop their own set of religious beliefs than to accept a comprehensive set of beliefs taught by a particular church," the report said.
Nearly two-thirds of "born again Christians" adopted that stance.
"In the past, when most people determined their theological and moral points of view, the alternatives from which they chose were exclusively of Christian options - e.g., the Methodist point of view, the Baptist perspective, Catholic teaching, and so forth," Barna noted. "Today, Americans are more likely to pit a variety of non-Christian options against various Christian-based views. This has resulted in an abundance of unique worldviews based on personal combinations of theology drawn from a smattering of world religions such as Christianity, Buddhism, Judaism, Hinduism, and Islam as well as secularism."
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