AWESOME PARTY UNITY. Bob Dole Will Be Only Former GOP Nominee At Cleveland Convention
Bob Dole will be the only former GOP nominee attending the Cleveland Convention. He’s still searching for the outrage he was asking about in 1996Read More »
Well, just when it looked like things might be smoothing out a little bit we find out that two of the large “Bank-sters” are in big-g-g-g trouble again.
Goldman Sachs Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter.
Blankfein, 56, is in his sixth year at the helm of the largest U.S. investment bank, which has spent two years dodging accusations of conflicts of interest and fraud.
The move to retain Weingarten comes as investigations of Goldman and its role in the 2007-2009 financial crisis continue.
“Why do you bring in someone like that?” said the source, who was not authorized to speak publicly. “It says one thing: that they’re taking it seriously.”
Blankfein has not been charged in any civil or criminal case, and it was not immediately clear why he hired Weingarten.
David Wells, a spokesman for Goldman, declined to comment.
Weingarten did not respond to requests for comment.
As a result their stock is tanking big time and looks to keep falling.
Next up Bank of America, with their stock crumbling, it has plunged below $7.00 and will most likely be below $6.00 in a day or two. Investors just don’t believe their assets are worth what they are being told as they are inflated from their last bailout.
The solution everyone is talking about is the same one the US used with General Motors.
It’s too big to be seized and sold off so…
From Business Insider:
* Seize the bank
* Issue a statement saying that the bank’s senior debt obligations and contracts and deposits will be honored and all of the banks businesses will continue to operate as usual during a temporary “workout period” (this will reassure senior bondholders, depositors, and customers, so they don’t freak out and yank their money.)
* Suspend trading of Bank of America’s stock, which will be rendered worthless. (If you feel the need to throw shareholders a bone even though they’d have lost everything eventually anyway, promise them warrants in the new capital structure)
* Fire senior management
* Hire a team of conservative, independent analysts to quickly assess the value of Bank of America’s assets. Tell them to err on the conservative side.
* Write down the value of Bank of America’s assets by whatever it takes to make the balance sheet bombproof—focusing on second mortgages, commercial real-estate, European obligations, goodwill, and other “assets” that the market is skeptical about
* “Haircut” the unsecured creditors by whatever amount is necessary to close the gap between the asset writedown and the equity (BOFA currently has $222 billion of equity, so there’s a lot to work with).
* Inject $300 billion (or some multiple of the asset write-off) of fresh capital into the bank in the form of preferred and common stock—enough to make the bank extremely well-capitalized
* Hire new senior management
* Issue new common stock with the Treasury initially owning 100% of it
* Sell 20% of this common stock on the public market
* Eventually, when things have calmed down, sell the rest
They have not been able to solve their problems voluntarily and this is the next logical step, according to sources in Timmy’s office. The have been desperately trying to sell their stake in China Construction bank to raise capital. Too little too late is my guess.
If Bank of America is “systemically important,” as everyone agrees it is, then the “system” has every right—legally and morally—to protect itself from Bank of America’s recklessness and incompetence.