Thoughts rolling around in my head. Please excuse the random poorly written narrative. As Ms. Piggy used to say "use your imaginAsheeyun"......
What if Bank of America was "rescued"( a la rumors last week of a takeover) by JPM, who seems to be the healthiest US bank (on paper, disregarding derivatives exposure) allowing JPM to accept Fed funds(bailout) for it's altruistic(sarc) rescue of BAC's MBS ?
By absorbing BAC's balance sheet, JPM, who some contend are dying a slow death due to short Pm exposure as well as the European bank contagion will have a nice cover story for taking taxpayer money.
"Look at what this nice bank did, they took over these bad mortgages." Coupled with a solution from the white house to refi all these mortgages into Freddie/Fannie MBS will provide a cover story that paints a picture that the housing crisis is finally over......JPM accepts taxpayer cash via a Fannie/Freddie purchase of their MBS book to ease the pain of their nice guy action that helps them hide the losses from derivatives exposure and maintain their healthy aura without the headlines of another "Banker Bailout!".
Granted I'm not a politician, a banker or a criminal but seems to me this dog might hunt.
the double post. I have been known to drink at times. Help me out mods.
Dont know but JPM will end up taking over BAC in my opinion. There has also been some strange action on the financial puts and the xlf. I wrote about it early this week and have purchased some Nov puts for BAC. All I can say is if you look at the volume for low strike prices in the volumes I have been seeing then it says something big is coming and its not going to be pretty. This is just my opinion also but if BAC goes via Lehman Brothers then that would also wipe out any and all suits and they would not affect the companies that takes them over because they have already been cleared through the bankruptcy of the company. What a better way for JPM to get all of BAC ( M/L business which is what they are really after ) for cents on the dollar which will be paid for by tax dollars and huge federal guarantees and all of the bad home go via Fre/Fnm.