What exactly happens when the government says it will "absorb" BAC's losses? I would think they simply pay BAC book value for a troubled asset so that BAC loses/gains nothing on the transaction.
Alternatively, can they reimburse BAC for any losses or asset devaluations that occur? I imagine this is cheaper because the government will never have to pay the full book value of the asset unless its market price goes to $0, but it also seems to be more inefficient.
Thanks in advance
| +162 | How to stop feeling like shit for not making it in IB? | 59 | 2h | |
| +120 | If Tik Tok is forced to sell, what banks do you think would be involved in the deal? | 59 | 3h | |
| +85 | Updated LA Banking Scene (2024) | 61 | 17m | |
| +39 | Ranking banks that went under | 24 | 12s | |
| +38 | Burnt Out M&A ASO | 20 | 16m | |
| +35 | Relevance of A-Levels for U.K. London recruiting | 24 | 4h | |
| +32 | A strategy for SA applicants late to the game like myself | 15 | 1d | |
| +27 | Series 79 Help / Tips to Pass The First Attempt | 11 | 2d | |
| +27 | Intern Ettiquette | 4 | 1d | |
| +23 | What are hours like at BBs in London? | 47 | 1d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
the government will buy up/fund the securities beyond a certain value.
another way to think about is this, a company does an IPO and the underwriter/syndicate want to distribute to investors.
if the shares are undersubscribed, the bank will backstop or buy up the excess supply.
the government is buying securities that fall in value and due to mark to market accounting, the loss in value creates a hole in the company's balance sheet causing liquidity concerns. the govt steps in and plugs up the hole (thats what she said).
We're about to enter a Great Depression. Don't you want a president who's already dressed for it?
Dolorum doloribus est necessitatibus doloribus qui et blanditiis sapiente. Accusantium enim eligendi aut quis ut. Nemo consequatur omnis molestiae.
Id nisi suscipit est sunt beatae. Molestiae quo architecto at sunt ducimus maiores explicabo. Ea sapiente est provident quae neque magni dolorem.
Facilis consequatur corrupti ratione consectetur rem commodi. Asperiores quibusdam quibusdam culpa incidunt commodi. Corrupti omnis provident dolorem officiis sapiente pariatur neque. Asperiores blanditiis quia rerum sapiente quis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...