Thursday, January 15, 2009

Clumsy and Random Thoughts

  • Bank of America is getting Treasury help to ensure finalization of Merrill Lynch deal. This really proves that the administration regrets letting Lehman go.
  • Speaking of Bank of America/Merrill Lynch, aren't they essentially reconstructing exactly what Citigroup is trying to decontruct? Is it the model that doesn't work, or is it that Citigroup isn't managing their business? Is it the model that doesn't work, or is it that Citigroup was the pioneer of SIV and a leader in ABS CDO underwriting?
  • Treasury market is going to explore its lows in yield, maybe not today, maybe not tomorrow, but soon.

2 comments:

PNL4LYFE said...

I think BAC should be kicking themselves. If they had just waited another few weeks, they probably could have gotten ML for nothing just as JPM got WM and BSC. JPM is already recording a 1.1bn gain on the WM purchase. Given the stock move since then, I believe that's more than they paid for the company.

Jake said...

They couldn't have paid less. Remember, this was a stock for stock deal, and ML had raised I think 12bn, with a claw back provision if they sold for really anything less then what BAC paid. Good deal or not, by offering as much as they did, it was a cash accretive transaction, vs. having to pay back 12bn if they waited for a lower price.