- The Big Picture - http://www.ritholtz.com/blog -

Buffett Bails Out Bank of America

Posted By Barry Ritholtz On August 25, 2011 @ 9:37 am In Bailouts,Corporate Management,Credit | Comments Disabled

Make no mistake about this: Warren Buffett just saved Bank of America’s bacon.

A few items leap out this announcement:

1) BoA needed both capital and a reputation reboot. Buffett provided a little bit of both.

2) This gives lie to the claim that BofA needed no money

Counter argument — this was about the stock slide, not the capital structure, which remains opaque [1].

3) The fine print will be revealing of the specifics of the terms, but I am curious as to how this compares to the deal cut with Goldman Sachs (GS) and GE.

4) Buffett met with Obama a few days ago; I wonder what was discussed in THAT meeting.

5) Investors are cautioned that unless you are buying on the same terms as the billionaire, you are making a very different bet than he is.

More to follow later today.



• Buffett Invests $5 Billion in BofA (WSJ [2])

• Bank of America Says Buffett’s Berkshire Will Invest $5 Billion (Bloomberg [3])

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2011/08/buffett-bails-out-bank-of-america/

URLs in this post:

[1] opaque: http://www.ritholtz.com/blog/2011/08/big-banks-under-capitalized-overexposed-opaque/

[2] WSJ: http://online.wsj.com/article/SB10001424053111904787404576530211731979854.html

[3] Bloomberg: http://www.bloomberg.com/news/2011-08-25/berkshire-hathaway-to-invest-5-billion-in-bank-of-america-shares-surge.html

Copyright © 2008 The Big Picture. All rights reserved.