I think the jury is out on whether BofA really is “dumb”. I wouldn’t call buying CFC assets while simultaneously walking away from CFC’s debts obligations a “dumb” move. If things play out like what people think Mr. Lewis wants it to play out, the only “dumb” people in the end will be the other end of those debt…those CFC bondholders …the second biggest joke will be on the taxpayers.
As is very likely to turn out (to the dismay of many people), BAC (and JPM for that matter) may be the one who has the last laugh.
There’s all this about “wait, they can’t do that”… Um, normally that would probably be true…But with the financial markets and housing market in the disarray that it is, is the Fed really going to stop them? No one knows…But if I were to guess, I know what I’d speculate on.
If there’s anything that the Fed’s proved recently is that they are going to take drastic actions at preventing any financial meltdown, even if it means bending some rules around. Case in point, let’s talk about all the short sale restrictions that have just been re-extended on a lot of the financial company’s stock. Let’s talk about housing assistance, and all the bailout plans for Freddie and Fannie. The last thing I think they will want to do is piss of BAC. Afterall, let’s see. worst case BAC goes under, and what happens? Yup bigger problem for FDIC (well actually that would be the smallest of all the problems if BAC really were to go under). But you get my point it think. BAC can strongarm the govern now. Rules are going to bend for BAC…You can count on it.
