Bailout to a bank that doesn't need it...

KFC911 · 10-30-2008, 06:42 AM

This whole banking bailout is disgusting from my perspective. As I've posted earlier, there are plenty of strong, well run, regional & local banks who haven't been mismanaged into the ground due to "corporate greed" and banking deregulation. I read yesterday that BB&T (a "good", conservative, regional bank based here in NC) will receive over 3 BILLION from the bailout, and the CEO (a good one) stated that they don't even need the infusion...that they already have plenty of money to lend

. BB&T's going to take it (they're not fools), and they'll make money on the 3 BILLION (at taxpayer's expense), but this bailout just SUCKS from the word go imo.

Rick Lee · Rick Lee's Garage

Look at the upside. At least they have a chance of making money on it instead of losing money and having it really go down a rathole.

MotoSook · 10-30-2008, 06:49 AM

Have you seen the commission numbers for the the bailout firms?

What are the people elected to protect our interest doing about it? NOW! (Not when it's too late.)

KFC911 · 10-30-2008, 06:49 AM

If the 3 Billion wasn't essentially coming from China, I could stomach it a lot better

KFC911 · 10-30-2008, 06:53 AM

Quote:

Originally Posted by Souk

Have you seen the commission numbers for the the bailout firms?

What are the people elected to protect our interest doing about it? NOW! (Not when it's too late.)

I haven't, but don't really need to

. A LOT of folks in Paulson's "good 'ole boy" network are going to make rather large fortunes on this mess...

VincentVega · 10-30-2008, 06:56 AM

If BB&T doesn't need the $$ and is well capitalized it sounds like BBT is a buy.

Gotta find a positive, no use in complaining about the bailout at this point.

dtw · 10-30-2008, 07:06 AM

Interesting, I just met with some contacts at Bank of America this morning, and this was one of the first things we discussed. They did not need an infusion, but nonetheless received $25B under the plan. The 9 or 10 top bank CEOs were called to Washington and told "you need to take these funds". Here's why: the original plan was to target only banks that were in need of cash. However, it was reconsidered when it became apparent that this would just cause further flight from any bank that received an infusion, since they would be deemed 'sick'. Keep in mind that this bailout is as much about consumer confidence as it is about providing liquidity. If a bank receives $10B in cash infusion, but then depositors have a $12B run, then what really was the point?

I'm not in favor of the bailout program at all, for the record, but I don't find fault with the logic of how to apply the cash.

KFC911 · 10-30-2008, 07:08 AM

Hey, "It's my PPOT(y) and I'll cry if I want to"...sorry to whomever wrote the original song

. Actually I did hold BBT for several years (good dividends at the time), but it was very stagnant so I sold a few years ago...

KFC911 · 10-30-2008, 07:21 AM

Dave, that just make no sense to me at all. Those large banks that precipitated this mess ARE sick and dying, so why shouldn't they be deemed "sick". This is going to be a 700 BILLION pi$$ away... the good banks don't need it, and it isn't going to help the ones beyond help (like Wachovia, WAMU et al). Spread the wealth indeed...

competentone · 10-30-2008, 07:25 AM

Quote:

Originally Posted by dtw

Interesting, I just met with some contacts at Bank of America this morning, and this was one of the first things we discussed. They did not need an infusion, but nonetheless received $25B under the plan. The 9 or 10 top bank CEOs were called to Washington and told "you need to take these funds". Here's why: the original plan was to target only banks that were in need of cash. However, it was reconsidered when it became apparent that this would just cause further flight from any bank that received an infusion, since they would be deemed 'sick'. Keep in mind that this bailout is as much about consumer confidence as it is about providing liquidity. If a bank receives $10B in cash infusion, but then depositors have a $12B run, then what really was the point?

I'm not in favor of the bailout program at all, for the record, but I don't find fault with the logic of how to apply the cash.

You mean to tell us you really believe that propaganda?

David · David's Garage

So do these banks that receive the money now have to follow gov't imposed executive compensation rules?

KFC911 · 10-30-2008, 07:39 AM

Quote:

Originally Posted by 125shifter

So do these banks that receive the money now have to follow gov't imposed executive compensation rules?

I don't know the answer, but I've got a pretty good idea on how that will play out

. Does the "GOOD 'OLE BOY" network mean anything to you

. What did Paulson make his "last" year at GS...something like 40 million? Now the CEO of BoA might "defer" his compensation during the "loan period", but those guys play under a different set of rules than the rest of us.

competentone · 10-30-2008, 07:42 AM

Quote:

Originally Posted by 125shifter

So do these banks that receive the money now have to follow gov't imposed executive compensation rules?

Quote:

And it seems many on Wall Street are expecting some big money. Rich Layne of eFinancialCareers tells Fast Money, "I thought you'd be interested in the results of post-bailout survey of Wall Street professionals on their bonuses expectations. 2/3 are expecting a 2008 bonus; 36% are expecting that bonus to be higher than their 2007 bonuses. There's even a minority - 10% - that expect this year's bonus to the 33% higher."

http://www.cnbc.com/id/27443937

KFC911 · 10-30-2008, 07:45 AM

A quick search showed that Ken Lewis (CEO of BoA) made 91.5 MILLION in '06 (alone) from the sale of his options...that's just one year (but I'm sure the options were accumulated over time)...like I said "a different set of rules" if you're part of the GOB network.

dtw · 10-30-2008, 10:09 AM

Keith, I don't know how else to explain it. Blighting certain banks with the money isn't going to help anything, and is an even more surefire waste of taxpayer money than the existing plan.

PNC bank, for example, is using excess cash to go acquiring. This apparently has infuriated the Bush White House, as it sent a letter this week to banks, instructing them to start actually lending out this money.

CO, whatever your name is, I think the whole deal is a turd sandwich. As such, I don't find any aspect of it palatable.

KFC911 · 10-30-2008, 10:19 AM

Yes, a "turd sandwich" is very appropriate, and no amount of condiments are going to help it go down

. I just don't buy the BoA explanation....if there's a "credit crunch", yet we still have strong, healthy banks with "their" money, ready, willing, and able to lend (BoA, BBT, etc.) why don't folks borrow from the banks that have NOT been mismanaged in the first place? It just stinks...

pwd72s · 10-30-2008, 10:24 AM

Our regional "Umpqua Bank" is getting the same deal. CEO saying he may use some of the funds to take over banks in trouble, place them on a sound footing.

dtw · 10-30-2008, 10:50 AM

Keith, I find that some good, fresh Sriracha sauce will mask just about anything. It has gotta be fresh and bright red.

Keep in mind, it isn't really BofA's explanation. That was the thrust of the meeting in Washington and there wasn't any secret made of it. Basically, "Here's a ***** sandwich, take a bite even if you're not hungry". The gentlemen I met with this morning characterized the CEO as 'surprised' that the program ended up that way. Since mid September when all this hit the fan, BofA has taken in billions in deposits. In their own candid words, they really didn't need any more cash. Now that they're $25B up, what will they do? I don't know, they didn't say. Our discussion moved to other topics from that point.

Paul, sounds like PNC is not the only bank doing this, from what you and others are saying. Basically a 2nd tier of bailouts. Banks have been consolidating at a rapid pace for years now, I bet the activity gets even more sharp now.

KFC911 · 10-31-2008, 10:22 AM

Quote:

Originally Posted by dtw

Paul, sounds like PNC is not the only bank doing this, from what you and others are saying. Basically a 2nd tier of bailouts. Banks have been consolidating at a rapid pace for years now, I bet the activity gets even more sharp now.

I just saw where this would be illegal. The influx of funds is to be used "solely for lending". Of course, the loophole (for the healthy banks) will be, "but that dollar I used to "buy" is not a "taxpayer" dollar, but one I already had"...this pile of poo just keeps getting stinkier. For what it's worth Dave, I "hope" the banking consolidation doesn't accelerate (and I seriously doubt that it can at a faster rate than it has over the past 20 years, since many of the fairly large regional banks have already been bought out). IMO, that (the creation of mega-banks) is EXACTLY what led us down this path of mis-management and humongous executive salaries in the first place. I spent the first half of my technical career inside the belly of the beasts (a top 20 bank that's now part of BoA), and later Wachovia (but not the First Union that it is now), and it was downright ugly from my perspective as all "we" did was gobble up "typically, better managed" banks the whole time. The big fish eats the little ones, so to speak, consequences be damned. Well, the consequences are now being shifted to the rest of us

.

Dixie · Dixie's Garage

Think of it as an analogy. I put 50% down on my house. I negotiated the lowest purchase price possible. My neighbor's purchased with a liar-loan at 100% of the inflated price.

Now they can't make the payments, yet I can. Why do they get a break? Why do they get to re-negotiate their loan, and I do not?

...Now make the argument between banks.