Bank of America would have us believe the goodwill by itself was more valuable than what the market says the entire company is now worth. Investors don’t buy that. They see a company that needs to raise fresh capital, judging by the discount to book value, in spite of the company’s claims it doesn’t need to. The more the stock price falls, the more shares Bank of America would need to issue to appease the markets, leading to fears of even more share dilution.
The same story is playing out in Europe, driven by the sovereign-debt crisis. The 32 companies in the Euro Stoxx Banks Index yesterday had a stock-market value of 313.2 billion euros ($444 billion) and a combined book value of 620.5 billion euros. France’s Credit Agricole SA (ACA), the index’s third-largest bank by assets, trades for just 34 percent of book.
The whole bank bailout falacy and all the same old arguments, playing on the ignorance of the masses about how finance operates. Banks don’t loan their own money, they make loans from money on deposit. If the Fed and the US Government sincerely wanted to ease the credit crunch back in 2008, the they would have put money on deposit with the banks. That money would still be there too. Instead they gave “loaned” billions of dollars to the corporation of the bank! This [url=http://ameriloansearch.com/cash-advance-loans/get-us-fast-cash-loans-with-no-fax.html][b]US fast cash[/b][/url] was used to pay the expenses of the bank, pay salaries, bonuses, and to buy smaller healthy banks. Banks that were not in trouble and that didn’t want or need a “bailout”. The bigger banks then raided the assets of the smaller banks to make their ratios look better. This did nothing to ease the credit crunch and it did nothing to aid the failing banks, it just made their numbers “look better”. Since the money was a “loan” the government got no say in how the banks conducted their business. If the government wanted oversight then they should have used the billions of dollars to buy stock in the bad banks, then at least they could fire the board of directors, appoint a new CEO, and dictate business policy. Also, since those stocks were tanking at the time, they could have done this for much less than the amount that they “loaned” to the banks.