morning note/how do you raise capital without having to raise capital?
According to the leak du jour, BAC needs $34b in equity capital in order to absorb the losses estimated in the ’stress test.’ Considering that they’ve already received $45b in preferred stock from the US taxpayer, an accounting maneuver of converting that to common can, Voila, cure their capital needs without raising a penny of new money, a move that even the magician David Copperfield would be in awe of. BAC can also sell assets as to limit the dilution to their shareholders. Until the banking system starts replacing debt with equity by either exchanges or by dramatically shrinking their balance sheets, all the capital raises are more about plugging holes and hoping for the rain to stop as opposed to lowering the overall leverage of the banking system. ABC confidence rose 2 pts to the highest since early Oct. The MBA said purchases rose 5% after 3 weeks of declines. Refi’s rose 1.2%. ADP jobs report is out today. DISCLAIMER Although the information contained herein has been obtained from sources Miller Tabak + Co., LLC believes to be reliable, its accuracy and completeness cannot be guaranteed. This report is for informational purposes only and under no circumstances is it to be construed as an offer to sell, or a solicitation to buy, any security. At various times we may have positions in and effect transactions in securities referred to herein
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morning note/how do you raise capital without having to raise capital?