- Federal regulators didn't like BoA's earnings and dividends, worrying BoA wouldn't be able to raise capital.
- Regulators suggested cut their dividend from $.32 to $.05 per share.
- The Fed pressured BoA to buy Merrill-Lynch, which they did in December.
- BoA lost $1.79B in Q4 '08.
- Merrill lost more than $15B.
- I don't know how much of that gets attributed to BoA's books, but it must be more than $1.79B.
It looks to me like BoA was on track to profit in Q4, and the Merrill acquisition pulled them down. If so, then BoA didn't really need a bailout at all. So some questions:
- If regulators were worried about BoA's stability, why pressure them to buy Merrill and take on more instability?
- If BoA hadn't bought Merrill, would they have needed any TARP money?
- Why not just prop up Merrill directly? I understand the desire to appear "capitalist", but nationalizing Merrill strikes me as less intervention than TARP.