Home › Forums › Financial Markets/Economics › Lehman Said to Prepare Bankruptcy as Buyers Withdraw (BofA to pick up Merril Lynch)
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September 14, 2008 at 8:18 PM #270508September 14, 2008 at 8:52 PM #270251
TheBreeze
Participant[quote=Arty]Add one more…Fed will accept “broader” set of collateral for loan…what’s the “broader” set? Junks that no one in their right mind will buy in the open market?[/quote]
Supposedly equities will be in the broader set. That seems ridiculous to me. Equities are very liquid so why not just sell them on the exchanges? It sounds like the Fed is trying to keep the stock market from crashing by having all the IBs, banks, and whoever else has access to the FED Discount Window trade in their equities for cash instead of selling them on the open market.
This seems quite crazy to me, but then so has this whole damn bailout.
September 14, 2008 at 8:52 PM #270485Participant[quote=Arty]Add one more…Fed will accept “broader” set of collateral for loan…what’s the “broader” set? Junks that no one in their right mind will buy in the open market?[/quote]
Supposedly equities will be in the broader set. That seems ridiculous to me. Equities are very liquid so why not just sell them on the exchanges? It sounds like the Fed is trying to keep the stock market from crashing by having all the IBs, banks, and whoever else has access to the FED Discount Window trade in their equities for cash instead of selling them on the open market.
This seems quite crazy to me, but then so has this whole damn bailout.
September 14, 2008 at 8:52 PM #270489Participant[quote=Arty]Add one more…Fed will accept “broader” set of collateral for loan…what’s the “broader” set? Junks that no one in their right mind will buy in the open market?[/quote]
Supposedly equities will be in the broader set. That seems ridiculous to me. Equities are very liquid so why not just sell them on the exchanges? It sounds like the Fed is trying to keep the stock market from crashing by having all the IBs, banks, and whoever else has access to the FED Discount Window trade in their equities for cash instead of selling them on the open market.
This seems quite crazy to me, but then so has this whole damn bailout.
September 14, 2008 at 8:52 PM #270537Participant[quote=Arty]Add one more…Fed will accept “broader” set of collateral for loan…what’s the “broader” set? Junks that no one in their right mind will buy in the open market?[/quote]
Supposedly equities will be in the broader set. That seems ridiculous to me. Equities are very liquid so why not just sell them on the exchanges? It sounds like the Fed is trying to keep the stock market from crashing by having all the IBs, banks, and whoever else has access to the FED Discount Window trade in their equities for cash instead of selling them on the open market.
This seems quite crazy to me, but then so has this whole damn bailout.
September 14, 2008 at 8:52 PM #270563Participant[quote=Arty]Add one more…Fed will accept “broader” set of collateral for loan…what’s the “broader” set? Junks that no one in their right mind will buy in the open market?[/quote]
Supposedly equities will be in the broader set. That seems ridiculous to me. Equities are very liquid so why not just sell them on the exchanges? It sounds like the Fed is trying to keep the stock market from crashing by having all the IBs, banks, and whoever else has access to the FED Discount Window trade in their equities for cash instead of selling them on the open market.
This seems quite crazy to me, but then so has this whole damn bailout.
September 14, 2008 at 9:38 PM #270301equalizer
Participant$18 Billion dollar premium for MER. CEO Thain will warrant a nice little bonus. What financial problem? BofA, WFC, JPM will just buy out all the other banks, Wall Street problems solved. BofA wouldn’t pay massive premium if MER had any problems (unless they secretly transfer all debt to Uncle Sam).
In election year, feds will do whatever it takes to stem the tide.
September 14, 2008 at 9:38 PM #270535Participant$18 Billion dollar premium for MER. CEO Thain will warrant a nice little bonus. What financial problem? BofA, WFC, JPM will just buy out all the other banks, Wall Street problems solved. BofA wouldn’t pay massive premium if MER had any problems (unless they secretly transfer all debt to Uncle Sam).
In election year, feds will do whatever it takes to stem the tide.
September 14, 2008 at 9:38 PM #270539Participant$18 Billion dollar premium for MER. CEO Thain will warrant a nice little bonus. What financial problem? BofA, WFC, JPM will just buy out all the other banks, Wall Street problems solved. BofA wouldn’t pay massive premium if MER had any problems (unless they secretly transfer all debt to Uncle Sam).
In election year, feds will do whatever it takes to stem the tide.
September 14, 2008 at 9:38 PM #270587Participant$18 Billion dollar premium for MER. CEO Thain will warrant a nice little bonus. What financial problem? BofA, WFC, JPM will just buy out all the other banks, Wall Street problems solved. BofA wouldn’t pay massive premium if MER had any problems (unless they secretly transfer all debt to Uncle Sam).
In election year, feds will do whatever it takes to stem the tide.
September 14, 2008 at 9:38 PM #270614Participant$18 Billion dollar premium for MER. CEO Thain will warrant a nice little bonus. What financial problem? BofA, WFC, JPM will just buy out all the other banks, Wall Street problems solved. BofA wouldn’t pay massive premium if MER had any problems (unless they secretly transfer all debt to Uncle Sam).
In election year, feds will do whatever it takes to stem the tide.
September 14, 2008 at 9:51 PM #270316davelj
Participant[quote=TheBreeze]Why is BofA paying a premium for MER? And why such a massive premium? MER was trading for $17 on Friday and BofA is going to pay $29.
That’s ridiculous. The gubmint must be involved somehow.[/quote]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.
September 14, 2008 at 9:51 PM #270550Participant[quote=TheBreeze]Why is BofA paying a premium for MER? And why such a massive premium? MER was trading for $17 on Friday and BofA is going to pay $29.
That’s ridiculous. The gubmint must be involved somehow.[/quote]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.
September 14, 2008 at 9:51 PM #270554Participant[quote=TheBreeze]Why is BofA paying a premium for MER? And why such a massive premium? MER was trading for $17 on Friday and BofA is going to pay $29.
That’s ridiculous. The gubmint must be involved somehow.[/quote]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.
September 14, 2008 at 9:51 PM #270602Participant[quote=TheBreeze]Why is BofA paying a premium for MER? And why such a massive premium? MER was trading for $17 on Friday and BofA is going to pay $29.
That’s ridiculous. The gubmint must be involved somehow.[/quote]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.
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