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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (32079)	9/18/2008 11:34:47 PM
From: Spekulatius	Respond to of 78686

Rich - I agree regarding CIT. It's business model is dead as it's clear they have no secure funding and their cost of capital is too high to earn a decent spread. They may be of value for a large bank with cheap deposits as a secure funding source and I could see a scenario where a bank takes them over in which case they could become or folded into the commercial lending division. This would make the most sense, otherwise they are dead. It's quite interesting that BofA can take over Merrill Lynch. BofA's tangible equity is pretty thin due to Goodwill from the LaSalle takeover than paid in cash. Countrywide is not exactly booming either. I think they may be due to a capital raise as well> I wonder what they tangible equity ratio is going to be after MER takeover. Sure they have secure funding to some extend because of deposit insurance where the FDIC (essentially the US government) is the backstop. The idea to run a regulated business and an investment bank under one roof isn't new either see Citigroup. Hopefully BofA can do better.