BofA needs 34bn$
Somebody please help me understanding this: BofA, capitalization 74bn$, needs to raise 34bn$ because it is apparently failing the requirements of the stress test. This would probably mean a diluiting of 50%. Yet the stock is up 7%.
Below from Yahoo! finance:
NEW YORK (AP) — Bank of America Corp. stock rose as investors appeared comforted by [...]
Bank of America 10bn$ capital raise
How on earth a bank that spends 50bn$ to buy Merrill Lynch would after a month need to raise 10bn$ at a discount of some 20/30% versus market price, diluting existing shareholders, in a market that is extremely tight on cash? It seems to me that some people might not have understood how serious the [...]
Lehman and Merrill
OK - this is old now. I wrote it early this morning, and the world changed egain, but hey! Why should I not post it?
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At the end, it did happen. A “major” financial institution has gone bust. So the FED has sort of “saved the face” with regard to Moral Hazard. Merrill would have probably [...]