Dodd-Frank has wonderful effects on zombies like Bank of America.
The implicit government guarantee these banks enjoy is a subsidy. The "five notches of uplift from government support assumptions" that Moody's gives to Bank of America translate into real profits for Bank of America. Without a presumed bailout, Bank of America's senior debt would be rated Baa3, just barely on the right side of the "Investment Grade"/"Speculative Grade" boundary. The presumed "government support" raises the bank's debt rating to A2, which is "very low credit risk." --Tim Carney quoted at AmSpec blog
Gotta be worth at least a free toaster or something....
By the way, I TOLD you that Chris Dodd was a bank-whore.
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1 comment:
I need to call BoA and tell them I've already paid off my credit card via my taxes.
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