Joey's Blog » FDIC http://www.joeyconway.me/blog THRILLS AND ADVENTURES! Tue, 01 Jun 2010 12:20:42 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 Bank of America Loan Backstop http://www.joeyconway.me/blog/2009/09/09/bank-of-america-loan-backstop/ http://www.joeyconway.me/blog/2009/09/09/bank-of-america-loan-backstop/#comments Wed, 09 Sep 2009 14:51:00 +0000 joey http://www.joeyconway.com/blog/?p=104 On January 16th 2009, Bank of America (BofA) disclosed with its first ever quarterly loss of $1.79 billion, a US government loan backstop for $118 billion on assets mostly from its government encouraged Merrill Lynch acquisition1. The loan backstop is designed to cover a pool of financial instruments, assets, for up to $118 billion with maturities up to 10 years through the Treasury and FDIC with the Federal Reserve providing the actual non-recourse loan2. The non-recourse loans means in the event BofA cannot repay the loan, the government is entitled to seize the risky assets being pledged by BofA as collateral, but if the loan value exceeds the value of the risky assets, it cannot go after BofA for the remaining loan amount.

There are a few strict limits imposed on BofA when using this loan facility: executive compensation must be submitted and approved by the government, dividends on common shares cannot exceed $.01 per share per quarter for three years without government approval, $4 billion of preferred stock with an 8% dividend rate along with other fees are to be paid to the government, and any material disposal of the risky assets in the pool by BofA has to be approved by the government2. 

As of July 2009, the overall confidence of the economy has picked up and BofA has never used the funding provided by the government loan backstop. Both sides, the government and BofA, agree the accord was never signed, but the government wants BofA to pay fees in the range of $2-4 billion for having the implicit government guarantee and potential access to the loan facility3.

 

1. Bloomberg – Bank of America Posts Quarterly Loss After Bailout

2. Treasury – Summary of Terms

3. Bloomberg – Bank of America Said to Balk at Paying Backstop Fee

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]]> http://www.joeyconway.me/blog/2009/09/09/bank-of-america-loan-backstop/feed/ 0 Bailout Money Tracker – CNN Money http://www.joeyconway.me/blog/2009/08/07/bailout-money-tracker-cnn-money/ http://www.joeyconway.me/blog/2009/08/07/bailout-money-tracker-cnn-money/#comments Fri, 07 Aug 2009 18:05:14 +0000 joey http://joeyconway.com/blog/?p=58 CNN Money is maintaining a great resource tracking all the bailout money.

For an overall comprehensive list of all the bailout programs by Congress, Treasury and the Fed: http://joeyconway.com/73da87

List of 650 banks, so far, which have received bailout money: http://joeyconway.com/7rz83r

List of 94 failed banks, so far, which the FDIC has taken over:  http://joeyconway.com/rvtaxw

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