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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (185667)	2/22/2009 12:30:52 AM
From: energyplay	Read Replies (1) \| Respond to of 306849

Citibank is a very international bank, with massive overseas activity. It will need to be handled differently. It is also very complex. The parts may go to 5 or more different banks, and there may still be something called Citibank also. I expect JPMorgan Chase will buy parts, since Jamie Dimon, their CEO, used to work at Citi and can understand it. This may be left to be fixed last. ***** Bank of America did a lot of mergers in the past 10 years, last I checked they still did not have all their computer systems talking to each other - a transfer from a B of A account in California to a B of A account in Florida (former Barnett Bank) would take several days. There 3 main parts to the B of A mess - 1) All their dumb loans, and the CDOs that B of A bought. This portfolio is probably about average, and covers almost all the US. I expect this could be fixed with moderate capital addition. 2) All the bad loans and liabilities acquired with CountryWide Mortgage and Tanning Salons. This deal was done in the spring of 2008. As the economy and housing have become worse, this deal looks worse and worse. Had Lehman and AIG not failed, this might have been a good buy as prices recover in 2009. 3) Merrill Lynch. The real toxic waste. In a 9 month period starting in mid 2007, Merrill Lynch expanded the value of Credit Default Swaps they wrote from 4 Billion to 60 Billion dollars, during that period, they did not sell or short in of the underlying bonds. No hedges. Note that the B of A bought Merrill Lynch after less than five days due diligence with the encouragement of the US government's Treasury department and the Fed. Here's another data point - the derivatives book that Meriil had was about the same size as Goldman Sach's. Merrill had about 270 compliance and risk officers. Goldman had over 2000. So I expect these two "banks" will get some special arrangement.