You just bought more bad bank debt v.BoA backdoor bail out

[mstng86]

Why did BoA buy out Countrywide in the first place than?

Lewis believed he was getting a bargain at the time. I don't remember what BofA bought it for, but I remember it being something like 10% of what it was once worth.

I could be wrong on the percentage. I am sure Al can tell us.

[The King]

Lewis believed he was getting a bargain at the time. I don't remember what BofA bought it for, but I remember it being something like 10% of what it was once worth.

I could be wrong on the percentage. I am sure Al can tell us.

I bought some Countrywide stock right before they were acquired by BoA, and made a decent profit off of it. Just goes to show that in some cases the actual health (or lack thereof) of a company has little bearing on it's stock performance.

[Broncojohnny]

Lewis believed he was getting a bargain at the time. I don't remember what BofA bought it for, but I remember it being something like 10% of what it was once worth.

I could be wrong on the percentage. I am sure Al can tell us.

They paid something like $7.15 a share at a time when Countrywide was selling for $7.60 a share. The thing is, they bought it with their stock which was in the $30 range at the time. So, what did they really pay for Countrywide given where their stock is at today and the dividends they are paying? Jack Squat.

Even then it is still one of the worst business deals ever. I had heard at one time that the Fed begged Ken Lewis to buy Countrywide because they posed a systemic risk and their failing was a systemic risk. Of course it was just months later that they let Lehman fail and that was a complete disaster.

[mstng86]

Even then it is still one of the worst business deals ever. I had heard at one time that the Fed begged Ken Lewis to buy Countrywide because they posed a systemic risk and their failing was a systemic risk. Of course it was just months later that they let Lehman fail and that was a complete disaster.

So do you think the Fed and gov are just keeping their promise to back BofA after buying Countrywide?

[Broncojohnny]

I bought some Countrywide stock right before they were acquired by BoA, and made a decent profit off of it. Just goes to show that in some cases the actual health (or lack thereof) of a company has little bearing on it's stock performance.

Stock price is all about hype and fear.

[Broncojohnny]

So do you think the Fed and gov are just keeping their promise to back BofA after buying Countrywide?

I don't know. You never know what goes on in these back room deals. I just have a hard time thinking that Ken Lewis would see the subprime fiasco coming and then turn right around and buy that piece of shit. Without some sort of incentive those two things just won't reconcile in my mind.

[mstng86]

I don't know. You never know what goes on in these back room deals. I just have a hard time thinking that Ken Lewis would see the subprime fiasco coming and then turn right around and buy that piece of shit. Without some sort of incentive those two things just won't reconcile in my mind.

We probably will never know. He is sitting on a beach on his own island having a fruit coctail right about now I bet.

[Denny]

I don't know. You never know what goes on in these back room deals. I just have a hard time thinking that Ken Lewis would see the subprime fiasco coming and then turn right around and buy that piece of shit. Without some sort of incentive those two things just won't reconcile in my mind.

I'm pretty sure it was more of a defensive move, rather than an opportunity to gain something. They would have guaranteed him to go the way of Lehman.

[line-em-up]

....

I like how the article fails to mention that Bank of America paid back its TARP funds with interest to the government. This is after Paulson FORCED the banks to accept the money. That's right, not all of them needed it or wanted it. Here are the documents they signed:

That's inline with what my wife was told be her management at BofA. Supposedly, when BofA was looking at buying Merill Lynch, they found out that ML was lying about their bad debts and BofA wanted to back out. The govt told them they had to buy them anyway.

http://blogs.wsj.com/deals/2009/01/22/bank-of-america-merrill-lynch-a-50-billion-deal-from-hell/

BTW. She got laid off this year after 25+ years of service there. Her and about 5 others in her office got canned that day. They all had 25+ years of service. Fuck B0fA

[line-em-up]

...

By Heidi N. Moore
Mergers often prove troublesome, but few have set the land-speed record for disaster as fast as Bank of America’s $50 billion acquisition of Merrill Lynch.


Let us detail the ways. Only three weeks after the deal closed on Jan. 1, there has been the departure of several high-level executives including the president, chief executive and head of wealth management of Merrill Lynch; an additional $20 billion in Treasury support; $118 billion of government backstops; a $15 billion loss at Merrill that came after repeated assurances from both sides that due diligence was solid; the massacre in Bank of America shares, which have fallen 78% since the bank agreed to acquire Merrill on Sept. 15; lawsuits surrounding the surprise announcement of the Merrill Lynch loss; the revelation that BofA CEO Kenneth Lewis himself contemplated calling the whole thing off in December; and widespread fears of even steeper losses on Merrill’s troubled assets. That doesn’t even count the loss of market value. Bank of America closed at $33.74 on the Friday before the deal was closed. At Wednesday’s close of $6.68, the company’s market cap was $42.7 billion. The stock was at a 52-week low of $5.50 recently. BofA’s low trading price represents a complete wipeout of Merrill Lynch’s $17 trading price before the deal and the $29 price at which Merrill was acquired.

Then there are the embarrassing revelations: that former Merrill CEO John Thain–a man who criticized the largesse shown to former NYSE Chairman Dick Grasso–furnished his office with an $87,000 rug, arranged $25 million goodbye packages for his own hires, and handed out billions of dollars in last-minute bonuses to his staff before the acquisition closed. “That was a terrible precedent he set and a terrible decision at this time or any other time. I wouldn’t want my money spent that way,” Sen. Richard Shelby of Alabama–who added that he likes John Thain–said this morning of the outgoing executive’s decorating expenditures.

It is official. In Bank of America’s acquisition of Merrill Lynch is a candidate for the title of “A Deal from Hell.” You might remember that this is inspired by a book from Robert Bruner, dean of the Darden School of Business at the University of Virginia, “Deals From Hell: M&A Lessons That Rise Above the Ashes.” Bruner’s requirements for consideration included destruction of market value; financial instability; impaired strategic position; organizational weakness; damaged reputation; or violation of ethical norms and laws.

Check, check, check, check, check and mate.

Bank of America and Merrill Lynch arranged the deal in less than 48 hours, and the hasty work shows. Thain’s departure Thursday is the clincher, particularly on the matter of the culture clash to come between Bank of America and Merrill Lynch. Dealbreaker has the internal memo here.

Thain’s departure isn’t a surprise, given the scope of Merrill’s loss and the clash between Bank of America’s cautious commercial-banking culture and Merrill Lynch’s ties to the more risk-hungry Wall Street and Chicago business communities. Lewis is a canny political player, and if he had any hope of wrangling the acquisition, he had to try to break the will of the Merrill Lynch employees to impose Bank of America’s dominance. To do that, the best thing a CEO can hope for is to find a prominent executive, pillory the ways in which he behaved outside of Bank of America’s expected behavioral code–for instance, by publicizing the decorating costs, pinning Bank of America’s need for government money on Merrill write-downs–and oust him as an example to the Merrill underlings.

All of this isn’t to say the deal shouldn’t have happened. If Bank of America hadn’t acquired Merrill, it is likely the investment bank would have collapsed like Lehman Brothers under the force of market skepticism–which is exactly why the U.S. Treasury provided funds to keep it together. Bank of America may yet make the acquisition work by offering generous retention packages to Merrill brokers and carefully integrating the Merrill employees. Still, for now, the deal shows what happens when chief executives enter an agreement with eyes closed.

Related Reading
New York State AG Investigates Merrill Lynch Bonuses (Breaking News from Deal Journal) Law Blog: Merrill Loses Thain, Gains a Shareholder Suit Bank of America: Can a $15 Billion Problem Be Solved by Buying 513,000 Shares? Crisis Q&A: What Bank Nationalization Means for You Bank of America: How to Lose $20 Billion of Value in 2 Trading Days How Did BofA Get Merrill So Wrong? The Street Smarts of Bank of America’s Ken Lewis The Outrage of Bank of America’s Ken Lewis Highlights and Lowlights of BofA’s Earnings Call BofA’s Ken Lewis to Employees: ‘This Extraordinary Time Has Called for Extraordinary Measures’ BofA’s Acquisition of Merrill Lynch: From Good to Worse

[mstng86]

From what I understand, Merrill Lynch is making money for BofA now.

Not saying I am right, but that is what I have been told.

[AdamLX]

I jumped ship from BAC over a month ago and couldn't be happier. It would floor you to see how the company is run internally.

Ken Lewis was just the scapegoat while the government and others pulled strings to make the ML and Countrywide deals happen. Countrywide was acquired for it's servicing portfolio which was massive. What was understated and unrecognized was the actual amount of toxic assets they were holding that went hand in hand with the further deteriorating market.

Moynihan (current CEO at BAC) has been on the radar for being ousted by shareholders within the next 12 months if something doesn't turn around.

BAC is also looking at the possibility of unloading ML as well which looks just likes like a way for a cash grab to keep the powers that be at bay a little longer.

[mstng86]

I jumped ship from BAC over a month ago and couldn't be happier. It would floor you to see how the company is run internally.

Ken Lewis was just the scapegoat while the government and others pulled strings to make the ML and Countrywide deals happen. Countrywide was acquired for it's servicing portfolio which was massive. What was understated and unrecognized was the actual amount of toxic assets they were holding that went hand in hand with the further deteriorating market.

Moynihan (current CEO at BAC) has been on the radar for being ousted by shareholders within the next 12 months if something doesn't turn around.

BAC is also looking at the possibility of unloading ML as well which looks just likes like a way for a cash grab to keep the powers that be at bay a little longer.

Quitter!!!

LOL everything you say is true. Moynihan is in deep doo doo. I hadn't heard about selling off ML though.

[SMEGMA STENCH]

Entrails. Parade. NYC.

[Broncojohnny]

Quitter!!!

LOL everything you say is true. Moynihan is in deep doo doo. I hadn't heard about selling off ML though.

He said earlier this week that they weren't going to sell it but they would be selling off other assets to raise capital to meet the new requirements. He said it fit well with the rest of the business. For whatever all that is worth.