Henry Blodget has been alerting us to the inevitable collapse of Bank of America. The latest rumors are that BofA will go through a quick receivership and be bought, for less than nothing, by J.P. Morgan, at a cost to the taxpayer of some $100 billion.
Pretty soon we will run out of too big to fail banks to sell the big failed banks to.
Way back in 2009 many economists and regulators warned that Geithner's stress test of the too big to fail banks was a sham, and that it just covered up the problem, letting it fester and burst another day. That day has arrived for BofA, and we will be shoveling more billions into the failing big banks. Oddly this same bank was so wildly profitable after being bailed out in 2009 that they paid over $4.4 billion in bonuses. Bank of America's impending failure, largely due to toxic assets and mortgage fraud, and Treasury's desperation to dump it's carcass on to a bigger bank, is probably the reason behind the administration's rush for a mortgage whitewash. There is no evidence of a plan to address the on-going crimes, though hopefully J.P. Morgan won't be crass and pay huge bonuses after this windfall.
Left to be explained is how this continuing, massive transfer of wealth to the wealthiest does anything to relive the huge debt burden hanging over American households, the debt burden that has trapped us at 9% unemployment for almost three years. And how is it that Obama can find hundreds of billions, at the drop of a hat, to bail out banks, but is powerless to do anything about disastrous unemployment?
5:23 AM PT: Slate has an overview with more detail. BofA is resorting to ad hominem against Blodget, who responds with Show me the Money.