I understand that Merrils write downs exceded anyone's expectations. BAC was going to walk away but the Gov't gave them the 20 Billion to cover the write downs. It's a wash in my eyes. Getting rid of Thain is a good thing. Lewis is a proven leader in the banking industry. What's changed in the past 48 hours? Nothing in my opninion but some modest improvements.
Bank Failure Facts
According to the FDIC, from 1934 through 2007, there were only two years with no bank failures, 2005 and 2006.
The year during that period with the most bank failures was 1989, when 534 banks closed their doors.
During the savings-and-loan crisis (1986-95), 2,377 banks failed, representing 67 percent of the 3,559 bank failures from 1934 through May 2008. At the peak of the crisis (1988-1989), 1,004 banks failed, a rate of one failure every 1.38 days.
Bank Failures by Decade
"You're telling us you've personally seen the government take over hundreds and hundreds of banks? Are you for real?"
WM attracted $7B in private equity (remember the wunderkinds back in April?), all of which diluted existing common shareholders before the bank was finally seized. There is plenty of private equity available out there, but they won't be giving it to current investors.
I'm not saying that you eliminate the banking system..the the equity/debt holdrs should and need to be wiped out. The banking system needs to taken over by the gov't for the time being as the lander of last resort. No private equity money will ever be allocated to an inslovent bank. The only way to get the machinery working again is to nationalize the system (those that took and need TARP money only.
This is a contagion thats spreading to all sectors. i'd rather quarantine the distater to those financial institutions who took excessive risk and now must pay the price.
The gov't needs to guarantee deposits take over good assets and sell them to solvent institutions...use that money to from the sales to beging additional lending as well.
But for this to happen, the current banking institutions need to be wiped-out...