Sunday, February 22, 2009

Kick This Man In The Ass

American Scofflaw
mid growing rumors of bank nationalization, which the WSJ and Dow Jones attribute to, the great wealth destroying CEO of Bank of America felt obliged to give an emergency interview yesterday to play down talks of government takeover.

“When you talk about nationalization of Bank of America, it becomes absurd. What it appears to be are a bunch of malicious rumors,” Ken Lewis said in an interview. He went on to say “Our company continues to be profitable…We see no reason why a company that is profitable with strong levels of capital and liquidity and that continues to lend actively should be considered for nationalization.”

Well Ken, let us help you out and give you a few reasons:

1. The US taxpayer has already provided your company with $45 billion in direct capital and another $140 billion to support your most toxic and worthless assets. You’re entire company has a market capitalization of $24 billion, and so, the US taxpayer has already provided Bank of America with enough capital to buy your entire company 8 times over.

2. Were it not for the implied quasi backing of the US government, you would have no access to the credit markets to raise capital. You’ve benefited from a sweetheart deal which allowed you to issue $8 billion in low interest rate debt which is back by the FDIC. Again, transferring more of your companies risk to the public.

3. New Management. Like any good acquirer of companies, people foreign to your company will come in and do away with the “Low hanging fruit.” I can’t think of a better person to start with than you. I understand the extent of the systemic decline of the economy, but you sir have contributed greatly to your companies demise.

You thought it prudent to buy $2 billion of preferred stock from Countrywide which could be converted at $18 per share. After the deal, Countrywide’s shares continued to plummet on “Rumors” of bankruptcy and so you doubled down and invested another $4 billion to buy Countywide financial.

You though it prudent to buy Merrill Lynch, a company riddled in toxic assets, for $50 billion. The deal was announced on a Sunday, when everyone on the street new Merrill wouldn’t be open for business the following Monday without a deal. I’m curious as to your due diligence process? Morgan Stanley’s John Mack just took over Smith Barney for a few billion dollars. Take notes Ken.

Needless to say, a little bit of patience Mr. Lewis, would have gone a long way. Both companies could have been bought for pennies on each of the dollars you wasted if you only waited.

4. Profits. We’re glad that your company is profitable (as you claim) but we, the public, are outraged that you’ve used our money to nationalize your worthless assets while allowing you to keep your profits private. I was against giving your company any money at all, but since you survive only because of the American public, why should you’re shareholders be rewarded privately? Private investors aren’t willing to give you any money.

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