Vladimir Senkov

Paulson Throws Bernanke Under the Bus, Backs Ken Lewis

If Merrill was a large counter party to Goldman, I would suspect that Paulson would orchestrate the deal and strong arm Bank of America into buying Merrill so it would be able to make good on the trades and Goldman would win again.
Then, Paulson would set everything up such that everybody would blame the whole thing on some glasses wearing guy from the academia.
I'm not saying it's true or false as I don't know if Merrill was as large a counter party to Goldman as say AIG was.

Big Banks: Pulling Off the Ultimate Bait and Switch

I don't have an axe to grind. I knew shorting stocks of insolvent banks is too dangerous AFTER EVERYBODY REALIZED THEY ARE INSOLVENT. Even shorting them before everyone realized that was risky and required a lot of capital and patience. I had, long time ago, shorts on FNM and MS and occasionally bought puts on C.
But anyways, this isn't about me, this is about why a person may disagree with these plans even when he or she doesn't have an axe to grind.
When I go to a casino and play "no limit" roulette, I know that the odds are against me. But . . . If I could just double every time I loose, that changes everything! Even if the odds where 1/100 against me, I will still come out ahead, EVERY TIME! This is what I don't like about this plan.
Some private companies and individuals will become part of an entity that is REALLY too big to fail. Partnership with the freaking US Treasury with FDIC standing behind the scheme ready to provide leverage and a printing press in the next room ready to print more money if need be.
They can't loose people! They really can't!
The banks who get to dispose of their liabilities (there is no such thing as a bad asset. it's either an asset or a liability) also win, because they'll get 40 cents on the dollar instead of 7. Why not 7? Because if you give them 7 they'll be insolvent and you don't want that. So you'll give them 40 and they live happily ever after. Bonuses will grow bigger than ever. Everybody wins? Only if you really believe that you can have something for nothing. See, I don't, but I read more and more on the subject and it seems to me that most people actually do or want us to. They explain these elaborate schemes of moving things around, creating new entities, changing the rules in the middle of the game, etc, etc. And the expectation is that by the end of the day everything is fixed. I keep hearing these "5 years from now taxpayer gets all the money back + profit" type statements.
Nobody actually explains who gets the short end of the stick. Where are all these profits going to come from?
That's where I have a problem with these schemes and gimmicks that keep coming out of our government at an ever increasing rate. No, I don't have an axe to grind, yet. But it will be too late when we'll all become millionaires . . . like in Zimbabwe. It will be too late to grind the axe then.

Bank of America: A Risky Bet That May Be Worth It - Barron's

Rachael,
As long as banks keep doing stupid things there will be no point in making a long term investment into them.
As you mentioned, there is massive dilution coming, so buying common shares before that dilution is over with is very risky even in the short term.
One might be able to purchase some shares on speculation and sell them to the greater fool later. This is not much different from putting some money on red except it may make you feel as if you did "something intelligent".