Um... Ah... Well... There's... WTF ???

[WillyT]

Warren Buffett's Bank Of America Investment Shows Faith In Government Support, Experts Say
William Alden - HuffPo
Posted: 8/25/11 06:36 PM ET

<snip>

NEW YORK -- The multi-billion dollar capital injection that Bank of America said it's getting from Warren Buffett's company is an extremely safe investment, experts said Thursday -- but not because Bank of America is a strong company.

Berkshire Hathaway's investment is safe, these finance experts said, because the government has the bank's back.

Although government regulators insist the era of bank bailouts is over, many who study the financial industry say the nation's biggest banks are still too big to fail, meaning they must be rescued by the government when they face potentially fatal trouble in order to prevent a broader collapse of the financial system. Bank of America, the country's largest bank by assets, is thought to rank high on this list -- a perception seemingly underscored by Buffett's willingness to put a significant sum into the company.

"This is the taxpayer giving Warren Buffett a great return," said Amar Bhide, a professor of international business at the Fletcher School of Law and Diplomacy at Tufts University. "He knows that Bank of America is too big to fail. If it is too big to fail, then why not?"

<snip>

More: http://www.huffingtonpost.com/2011/08/25/warren-buffett-bank-america-too-big-to-fail_n_937118.html

:beer::beer::beer:

:smoke:

:boring:

[Donnachaidh]

1. can bailout number two (or is it 3?) be far behind?

Yeah, he wants to be in the line where the checks are handed out, straight from the Treasury. He's SUCH a progressive guy.... :eyes:

[Art_from_Ark]

3. Since he's been pointing out how his tax rate is lower than his secretary's

then he can hand those checks right back to the Treasury to show he's serious about paying his fair share

[roguevalley]

6. he got rich they way people usually do, screwing everything that

moves. I have never believed he's sweet old uncle otis. He's a big ass just like the other bloodsuckers.

[Starry Messenger]

9. +1

[coalition_unwilling]

2. I really have to disagree with the premise of this article, that somehow

Warren Buffett is getting away with something for nothing by injecting $5 billion into BofA knowing his investment is backed by the U.S. government and taxpayers because BofA is too big to fail.

If this premise were valid, then could someone explain why BofA's common stock had declined 50% so far in 2011 and rose 10% after Buffett's announcement? In other words, if Buffett knew BofA was a 'sure thing' then surely other investors knew this as well. Yet they had bid down BofA's stock price by 50% so far in 2011 prior to Buffett's announcement, a surefire proof that the BofA investment is not a 'sure thing.'

Color me confused but surely Buffett isn't the only investor to comprehend the principle of 'too big to fail.'

[Hydra]

4. This is a problem with all of the Big Banks

I read somewhere that JP Morgan Chase has a ridiculous amount of derivative exposure. We still haven't seen all of that unravel yet.

[unblock]

5. the institution may be too big to fail, but that doesn't mean the common (or even preferred)

will have anything left should the company tank.

my understanding is that the fed can now take ailing banks into receivership and keep the company running while wiping out the common shareholders.

and frankly, i think the public won't stand for another round of bailouts done in the paulson fashion.

[GeorgeGist]

7. I hope he loses every cent.

[TheWraith]

8. Nice way to address the richest Democrat on the planet. nt