Here we go again, says CNBC’s Tyler Mathison on Fast Money. The Wall Street Journal reports that Bank of America is going back to the Treasury to ask for more money, presumably to help with the acquisition of Merrill Lynch.
Merrill Lynch's losses in the fourth quarter were larger than expected, which spurred Bank of America to start talking to the Treasury. The terms of the government aid are still being finalized, and details are expected to be announced with Bank of America's fourth-quarter earnings, due out Jan. 20.
A possible deal would involve protecting Bank of America from Merrill's bad assets by capping the bank's potential losses from them.
Strategy Session with the Fast Money Traders
Opinions on giving Bank of America more funds are wide ranging. Barry Ritholtz director of equity research at Fusion IQ tells us it could be time for some of them to fail. “You can not rescue all of the banks,” he says. He thinks it time to "determine which banks have to be put down. If they have viable assets spin them out.”
Sticking with that theme, Pete Najarian thinks if the feds allow a major bank to fail it's going to be Citigroup. "The options action has been extreme and the stock itself traded under $5."
As you can imagine Dylan Ratigan finds it outrageous that taxpayers are once again, coming to the rescue. "Ultimately I think it’s the government’s fault for allowing bank CEO’s to get into this kind of mess," he says.
David Konrad, head of large cap bank research at Keef, Bruyette & Woods, also takes issue with the way the TARP money is used. He says, "the government uses the TARP to receive preferred stock. The market is holding common stock and it’s subordinate." As far as Konrad is concerned that's a major flaw and why the cash infustions aren't really helping the market in general.
And leave it to Jeff Macke to add some humor to the situation. "It’s Alexander Hamilton’s fault, he bristles. "We should exhume him and shoot him again. No one is too big to fail. I wish they would just let the bad banks die and let the chips fall where they may."
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Trader disclosure: On Jan. 14th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (TM), (DIS), (MSFT), (SDS), (AAPL); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), NUE); Seymour Owns (BAC), (EEM), (F), (TSO), (AAPL); Najarian Owns (HSBC), (MSFT), (MS), (CSCO), (XME); Najarian Owns (DNA) Calls, (NVLS) Calls, (NVDA) Calls; Najarian Owns (C) Puts; Najarian Owns (CSCO) Short Calls; Najarian Owns (MS) Short Calls
For David Konrad:
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