BofA, Lehman, Merrill, Morgan Stanley, UBS, Hank Paulson, AIG
The newspaper quotes Ladenburg Thalmann analyst Richard Bove, who said: 'Bank of America's in a pretty strong position, not because it raised capital, but because deposits are pouring into the company, growing deposits faster than would normally be the case. The bank is actually in a predatory position. I believe it is looking for more acquisitions like this, even with Countrywide and Merrill Lynch under its belt. There's no issue that this deal won't go through'.
The Wall Street Journal reports that over 1,000 investors took part in a demonstration in Hong Kong earlier this week, protesting their anger that local banks 'conned' them into buying Lehman 'minibonds', which were pitched as safe investments.
One middle aged housewife, whose family lost about $450,000 on 'the minibonds', told the newspaper: 'I've never even heard of Lehman. These banks understand all these complex things, and we don't understand them - how can we stand a chance ?'.
Reuters reports that Fox-Pitt Kelton analyst David Trone is estimating that Merrill Lynch will take $8.5bn in net writedowns in the third-quarter, and post its fifth-consecutive quarterly loss.
The Wall Street Journal also reports that Morgan Stanley CEO John Mack is said to have told employees via a webcast that 'this is a tense time. people are anxious, but you've got to stay close to your clients and be the calm voice on the other end of the phone'. In the meantime, Bloomberg reports that the firm may have its long term credit rating cut by Moody's, which is concerned that the current economic environment may affect profit. Morgan Stanley's shares fell 26% in New York trading Thursday, on persistent rumors that Japanese bank Mitsubishi UFJ Financial may not come through with its promised $9bn investment - something both parties have insisted will still happen.
The Times reports that David Aufhauer, the former general counsel of UBS Investment Bank, has agreed to pay $6.5m to settle an allegation that he sold his investments in auction-rate securities after receiving an internal e-mail indicating that all was not well in that area.
The Daily Telegraph reports that US Treasury Secretary Hank Paulson has warned that the banking crisis is likely to claim more victims, and that other institutions are likely to fail. And, quoting an unnamed source close to Paulson, Reuters reports that, as early as the end of the month, the Treasury stands ready to start directly inject capital into US banks in return for common or preference shares.
Finally, The New York Times reports that the US Federal Reserve has confirmed that it will provide an additional $37.8bn to AIG 'to help it deal with a rapidly dwindling supply of cash'. This facility is in addition to the $85bn bridging loan granted last month.
Note that the author currently holds a small position in Bank of America stock.
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