Word: banking
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...bank could also negotiate with the federal government to get it to convert its preferred shares to common. That would cause uncommon dilution which would almost certainly drag down the price of the bank's stock. (See pictures of the global financial crisis...
...Bernanke said that the large banks that need to raise money will be able to do so in the private capital markets. If he is wrong, Bank of America will be back to ask for more loans from the government, which might cost the firm its independence...
That does not mean that the bank cannot play the Merrill card in the court of public opinion. B of A's CEO Ken Lewis has already made the case the Henry Paulson virtually forced him to close the Merrill deal because it was in the best interests of the country's troubled financial system. If that transaction is at the heart of B of A's capital shortfall, the firm has a legitimate argument that because it helped the government when it was in a jam, it is time for the government to repay the favor...
Will complaining that government pressure to "save" Merrill and Countrywide get Bank of America more favorable terms than other firms that the government says need more cash? Probably not, but it is all B of A has left to make a case that its balance sheet issues are not entirely its fault...
Bernanke has proven himself to be a particularly talented public servant. He saw the credit crisis coming and adjusted the central bank's policies at a rate which was abnormally fast based on Fed history. He offered hundreds of millions of dollars of liquidity to banks that probably would have collapsed without it. He manhandled the people who got in his way, most recently Ken Lewis from Bank of America...