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The share prices of Citigroup and Bank of America were down sharply, while JP Morgan was all over the place, both up and down.
What’s the deal?
First the news on Bank of America…
US close to giving B of A billions more aid--WSJ
NEW YORK, Jan 14 (Reuters) - The U.S. government is close to pledging billions of dollars of additional aid to Bank of America Corp , the Wall Street Journal reported on Wednesday, making the bank the second to require a second round of emergency government aid.
Bank of America is struggling to digest its Jan. 1 acquisition of Merrill Lynch & Co, the newspaper said, citing people familiar with the situation. The bank's shares dropped more than 5 percent after hours, reaching their lowest level since 1991.
Merrill Lynch's losses in the fourth quarter were larger than expected, which spurred Bank of America to start talking to the Treasury. The terms of the government aid are still being finalized, and details are expected to be announced with Bank of America's fourth-quarter earnings, due out Jan. 20.
A possible deal would involve protecting Bank of America from Merrill's bad assets by capping the bank's potential losses from them.
Bank of America and Merrill Lynch together received $25 billion from the Treasury's Troubled Asset Relief program in October. Citigroup received the same amount in October, and another $20 billion of capital in November.
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The same source who has been filling us in on the real deal with JP Morgan Chase was right on the money about Bank of America. From Midas commentary on January 10…
"Key Merrill Lynch executives are getting out of Dodge, for good reason from what I hear. Bank of America’s takeover of Merrill closed a week ago. Word to me is that it will soon be revealed that Merrill’s loss this past quarter could be around $20 billion. Perhaps one of the most overrated executives in America is Bank of America’s Ken Lewis who paid way up ($29 per share) to get the faltering Merrill."
That Bank of America is going to have to go back to US taxpayers to stay afloat is mindboggling news to Planet Wall Street. This morning’s market selloff was of a freakout nature, and for good reason, as it is leading to my long running prediction that what The Gold Cartel and Planet Wall Street investment crowd have created is TOO BIG TO BAIL.
In addition to the concern about the badly run Bank of America, there were increasing concerns about the viability of Citigroup. About the time of the early market dump, I received this note from London…
Rumors in FX market that Citi will be nationalised over the week end.
Naturally the nationalization rumor about Citi is even more reason for the dollar to rally (Orwellian terms) and why the US intervened to makes sure it did so.
Before the market opened, JP Morgan came out with its quarterly results:
JPMorgan Profit Drops 76 Percent on Asset Writedowns
Jan. 15 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by assets, said profit fell 76 percent as rising defaults and the U.S. recession forced the bank to write down $2.9 billion of assets and boost reserves for bad loans.
Fourth-quarter net income was $702 million, or 7 cents a share, compared with $2.97 billion, or 86 cents, a year earlier, the New York-based bank said today in a statement. That included a $1.3 billion gain from closing a joint venture and "risk- management results," the company said. Without the gains, JPMorgan lost 28 cents a share….
http://www.bloomberg.com/apps/news?
pid=20601087&sid=aJnpIea7sSZQ&refer=home
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"risk- management results," … you mean like manipulating the gold market by colluding with our government and wiping out speculators in the process?
The concern over our entire financial system is growing everywhere, which is why the Orwellians keep intervening to prop up the dollar. It is beyond noticeable at this point. They are petrified of a PANIC! … which is why they are going bonkers behind the scenes to make JP Morgan look as viable and healthy as they can. This is the Fed’s bank and everyone knows it. Should it look like a Citi, and now Bank of America, it could start a run on the dollar like never seen before. Therefore, the effort to beautify JP Morgan is foremost in their thoughts … which is why it draws kudos from The Muppets as the best big bank out there, and by a wide margin.
What is so scary is that NONE of The Muppets are paying attention to JP Morgan’s monstrous derivatives book, which all of us in The Café are well aware of. It dwarfs all the other banks by a mile … make that miles. If IT is blowing up, as we have heard for over a month, GOOD GRIEF! Now with Citi and Bank of America on the ropes, we could actually be close to the worst financial nightmare imaginable, as the Fed is ALREADY stretched beyond belief.
And to think most of this nightmare stems from something so simple as The Gold Cartel rigging the price of gold over the last decade. No need to report my same schtick, but it is so true. And yet nothing changes. GATA is still not allowed to present our findings to the American public, as we are blackballed by the American free financial press. Even our $264,400 full-page color ad in the WSJ was ignored by them. Our prediction of "catastrophe" and "disaster" was ignored too. Yet, here we are.
Gold made a new low late in the day, dropping to $800.90. However, it quickly rebounded. In the Access Market it has risen to $810. Of note is that the London trader for our STALKER source got his 10% correction almost to the penny. Perhaps he was the late buyer.
