$138bn bail out agreed for Bank of America
The struggling Bank of America today was guaranteed funds to help then through the financial crisis. The Government had to step in today to help the Bank of America as they have seen losses that has never been recorded before. US government have put plans in to place today to allow up to $20 billion of US tax payer money in to the struggling bank.
Not only will there be a huge $20 billion going in to the bank for fast recovery, there will also be a large amount which is said to be in the range of $118 billion which will be used as a guarantee in case of bad assets coming through the bank.
The troubled bank first starting seeing signs of a large fall when the bought out Merrill Lynch which saw them lose on the first quarter 2008 around $15.30bn.
The money that has been put into the bank isn’t a gift from the government, the money will be used almost as a share holder, with the government/country, will be holding stakes in the bank.
Problems could be seen from the first financial year when the Bank of America reported to have lost in the region of $1.8 billion, which shows a staggering effect in the worlds economy as compared to the year previous they actually made profits of $280 million. The US treasury said today
“The objective of this programme is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings and retirement security,”
“In addition to the $20bn cash injection, the Treasury will “provide protection against the possibility of unusually large losses on an asset pool of approximately $118bn of loans”
The American government seems to have an endless supply of money from this chart it shows how much money has been put into bail out packages so far.
- Citigroup: $45bn
- AIG: $40bn
- JP Morgan: $25bn
- Wells Fargo: $25bn
- General Motors: $10.4bn
- Goldman Sachs: $10bn
- Morgan Stanley: $10bn
- GMAC: $5bn
- Chrysler: $4bn
