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Countrywide Capital V (New) 7.0 Message Board

  • besmarter8 besmarter8 Aug 12, 2011 11:45 PM Flag

    Best Interest paid prefer

    Almost 9% return a year.

    It is safer than common.

    BAC has to keep on paying dividend. Remember US govt has BAC prefer too. Will they let BAC stop paying dividend. Before it happens, other bank will take it over. Another bank will assume the prefer.

    The bottom line is it won't happen. It is the name "Bank of America".

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    • besmarter8,

      You wrote, "BAC has to keep on paying dividend. Remember US govt has BAC prefer too. Will they let BAC stop paying dividend. Before it happens, other bank will take it over. Another bank will assume the prefer. "

      You're wrong. You need to remember. Or use Google. BAC repurchased the preferreds sold to the Treasury under TARP. The Treasury has even sold the associated BAC Warrants on the NYSE. The government has NO stake in BAC. You must be thinking Citibank. Or maybe GMAC aka Ally Bank.

      And there is no US Bank with as many assets or liabilities as BAC. None could swallow BAC without a massive injection from the FDIC ... or more likely the Treasury.

      And no bank would just "assume the preferred" without some huge incentive. What possible motivation would some other bank have to make such a bone-headed move? The only time stuff like that happens is when the bank is actually able to sell itself before the OCC steps in and puts it into receivership.

      If you're going to seriously invest in junior bank securities, you need to do your homework. If BAC gets taken over, this issue is probably toast.

      - Joel
      (Who's still holds a big chunk of CFC-PB and other BAC junior obligations.)

 
CFC-PB
25.72-0.01(-0.04%)May 27 4:00 PMEDT