pennben

Bank of America's Recent Stock Action

Nationalizing BAC and Citi would be, i think, the measure of last resort for the current administration. As unhealthy as it might be at the moment, the banking system remains the philosophical heart of a capitalist financial system--nationalizing would another blow to worldwide markets for which this administration does not want to shoulder more blame--imagine Davos times ten. The two biggest banks are nowhere near insolvent--the values of their toxic assets are not nearly as large as their secure asset bases. Cutting the dividend was something they had to do to show their committments to the government, and unfortunately the common shareholders got the shaft, as they always will be the first to take a hit. The shorts had a field day over the past couple weeks but the positions are now shifting. As for BAC's preferred stock, I would hold, but if someone advised you to buy a preferred at issue or par, you should really take them to task--i think your dividend is safe but it will quite a while before you regain value on the principle.