ERICOPOLY

I agree with your point but the same question could be asked of this: "Does it weaken the markets faith in purchasing insurance when both the commissioners and the courts will work to allow the insurance company to wiggle out and wall off assets when storm clouds gather?" It is a bit weird -- I would be a bit pissed personally just on the principle of the matter if I chose a diversified insurer when I bought a policy, only to have them undiversify (to their own profit and to my increased risk) when storm clouds turned dark.

It's convenient that BAC bought both Countrywide and Merrill. Countrywide is introducing the liquidity crunch and the Merrill managers don't control what Countrywide does. Things could have worked out differently. Citi could have bought Countrywide and Wells could have bought Merrill. Then the exact same situation would be happening perhaps, yet there could be no "conspiracy" claim. The glue that is holding the split together, ironically, is BofA itself. Without BofA's deep pockets Countrywide may not be able to pay (the recievable asset would have to be valued accordingly) and Merrill would still be demanding their contract be upheld. Merrill probably paid a little bit of extra premium for the diversity of business that MBIA was offering at the time. The peace of mind that if the structure finance markets blew up, there would be some security from the Municipal business. What happened afterwards is bait and switch -- no, you didn't buy insurance from a diversified insurere, you got a highly concentrated structured finance insurer in the end.

I could take loans from my father/uncle/brother in order to have the liquidity to pay my bills. Why is there an intra-company loan? If they can survive apart from National, then why do they rely on Nationa's liquidity? I don't really understand why they set themselves up for those questions. Why not just borrow from the markets? Did they get a more favorable price from National because MBIA is trying to put lipstick on a pig? In other words, if the split were already approved and that loan had to be refinanced, would National treat the next loan differently? Insolvency is not determined by whether or not you took loans. The basic test for insolvency is an inability to pay one's debts as they come due in the ordinary course. MBIA has not met this test. They have paid their debts as they come due. Note that the CDS on the CMBS where BAC is a protection buyer are not debts. They are contracts that don't have any incipient default. Nothing is imminent, nothing is in default currently and thus nothing is due. A vast array of companies use borrowing to help fund their endeavors. If they didn't have that funding, they would fold. I mean what you're saying is that if you don't have enough cash in the bank, you are insolvent. That isn't the definition of insolvency. There is nothing nefarious about an intercompany loan. Most companies with subsidiaries have them, it's just not seen as the books are consolidated. I can't speak to why they did that instead of tapping the capital markets. Obviously it was easier to do it this way, but it doesn't mean it raises a red flag in and of itself. My suspicion is that a below-market interest rate from National would be a back-door means of making MBIA Corp stronger and more able to pay claims than it really is. Thus perhaps intentionally deceptive. What I don't know is whether National gave them market terms.

I completely sold out of AIG on the day of the BAC earnings report and the following day. All went into BAC. The primary reasons were: 1) We're at 9% already and the rest is all yours 2) Oh, and by the way the GSE's have told us what they want from us and worst case it will be an extra $1b.

I could take loans from my father/uncle/brother in order to have the liquidity to pay my bills. Why is there an intra-company loan? If they can survive apart from National, then why do they rely on Nationa's liquidity? I don't really understand why they set themselves up for those questions. Why not just borrow from the markets? Did they get a more favorable price from National because MBIA is trying to put lipstick on a pig? In other words, if the split were already approved and that loan had to be refinanced, would National treat the next loan differently?

I feel that getting the bond solicitation done made a ruling on the split all that more unlikely in the absence of a monetization of the legal receivable. While it seems that BAC is the only loser in court, MBIA loses as well by potentially not getting National back up and running right away (as the clock ticks, it's foregone profits). Neither wins in court.

It's merely a 50 cent dollar though Sanjeev with a relatively high degree of certainty. Can you elaborate more on why it's a buy?

Yes, good job Dazel. For now I am going to be cheering for JPM to move out of the way -- it's valuation is low and likely will provide a ceiling to how far BAC can run in the near term. Might already be causing a problem. JPM's earnings power already shows through and it's only barely trading above tangible book value.

Loopy says he likes it up on top Yes he knows if he ever lets go The pretty machine will swallow him whole

I'm pretty sure I'm going to get laid tonight. And having an Amazon wife I bet she'll be on top!!! Oh no, here come the jockey stock jokes...

+1

I'm pretty sure I'm going to get laid tonight.

I was thinking about the Marquis Jet Card -- it's priced based on 25 hours to be used over 18 months. It doesn't have to be a jet though -- in fact, there are many smaller airports (short runways) that I want to fly into that a jet just can't do. My father had a Mooney that he kept at Palo Alto and we went camping all the time -- Hoopa, Lake Pillsbury, Eagle Lake, Truckee, Half Moon Bay. I'm just not confident that I would make a responsible pilot -- but maybe if I can find a retired Navy pilot living on a pension, and offer him some kind of deal where I pay him more than he could make in the Navy reserves, promise of no armed conflict, and he just needs to be on call (within respectful limits). Then we can just rent a plane from the local flying club when we want to go.

My father married an assertive strong-willed woman and I did the same. They are both Amazon women. I will never be free. I have money but I have no real decision making power.

Eric, Do you recall whether it's just the divvies that will be limited to 30% or is it total distributions of capital (ie, divvies plus buybacks) that will be limited to 30%? If it's the latter, then BAC's Basel III capital levels will become absolutely silly after another year or two... SJ Just the divvies. And thus if you are at 9% B3 already, then if you can survive the "adverse scenario" stress test with your proposed dividend distribution, then there ought to be no limitation on your buyback approval (as long as divvies+buybacks is within what you can generate)

Scoreboard! (I just jinxed it I'm sure)

I read that the Fed is limiting dividends to 30%. This is to address the situation where if the economy goes south the Fed can ask the company to halt the buybacks while still keeping the dividend payments flowing uninterrupted.

One of the shows I always hated was Lifestyles of the Rich and Famous. Champagne days and caviar dreams. Yuck! That was a very tacky show. At first I was mentioning NetJets metaphorically, but since moving to Santa Barbara I'm finding it to be practical (albeit very, very expensive). The airport here is awesome but it just doesn't fly directly to many places -- everything is a connecting flight. And I'm terrible at planning -- if it snows in Tahoe, I want to be able to make a Thursday night decision to take the kids skiing for the weekend. That means picking them up at school at noon, driving 10 minutes across town right to the plane, getting on, and being in Truckee 1 hour later. Driving to Truckee from Santa Barbara is a non-starter. Flying commercial means getting a connecting flight in Los Angeles and then on to Reno, then we're still at least another hour from Truckee if we're lucky to get our bags right away. So it's like a 4 or 5 hour trip probably counting the connections. Maybe 6 hours including early checkin with security and all. Compare that to just 1 hour on NetJets. Move to SF, you can drive to Tahoe in 3 hours, a few friends do this every other week during the winter. Oh to have been a fly on the wall listening to me venting and fuming with frustration when I told my wife that I wanted to move back to Los Altos Hills where I grew up, and her digging in her heels with refusal to live anywhere within close driving range of my parents. So I lost that one and now we're isolated from all of the NorCal locations that I grew up loving. But we live in a nice spot -- really nice. It's just too long of a drive from anywhere else.

My advice is to figure out who knows what they are talking about, listen to what they say, and use your reasoning and logic to determine if and when it is time to buy. All the time gurus discuss their holdings and ideas. The information is generally there but you have to buy what makes sense to you after looking at the logic. Buffett talks about fat pitches but I think that's because he is a major league player. I'm not, so I look for the "coach pitch/t-ball" plays.

do you have a pointer to the original speech/video? No. But I'm certain that it was Benmoche and that he said it. It was in an interview that I saw a clip of. It was never discussed on this board before.

One of the shows I always hated was Lifestyles of the Rich and Famous. Champagne days and caviar dreams. Yuck! That was a very tacky show. At first I was mentioning NetJets metaphorically, but since moving to Santa Barbara I'm finding it to be practical (albeit very, very expensive). The airport here is awesome but it just doesn't fly directly to many places -- everything is a connecting flight. And I'm terrible at planning -- if it snows in Tahoe, I want to be able to make a Thursday night decision to take the kids skiing for the weekend. That means picking them up at school at noon, driving 10 minutes across town right to the plane, getting on, and being in Truckee 1 hour later. Driving to Truckee from Santa Barbara is a non-starter. Flying commercial means getting a connecting flight in Los Angeles and then on to Reno, then we're still at least another hour from Truckee if we're lucky to get our bags right away. So it's like a 4 or 5 hour trip probably counting the connections. Maybe 6 hours including early checkin with security and all. Compare that to just 1 hour on NetJets.

I always have a laugh at everyone's expense. It's why I only have investment internet message board friends! ;D Usually I get into it with some of them too...as Eric knows! Now that is over...how about we go back to predicting BAC's stock price before Christmas...I'm still swinging for near tangible book, even though the window is closing fast. Cheers! Years ago I explained to this board why I chose ERICOPOLY as my handle. Well, it's because I've been known to debate a topic forever on logic and most people don't have the similar appetite. So I can sort of become the last one carrying on the debate. So it's kind of like a monopolist of discussion. A self-deprecating handle ;) Is that why? I don't remember. I always thought you wanted to own the world...or viewed yourself as a monopoly...or something to that effect. Or you just loved playing monopoly as a kid...I used to play for hours and hours. Cheers! It was my favorite game. That and collecting baseball cards. I figure the baseball cards one is not that much different from having a mind for stocks. I had a dart board in my garage and I found it pretty hard. I always find it funny when people compare stock picking to throwing darts because there are international dart champions -- some people are consistently the very best at throwing darts with amazing accuracy.

I always have a laugh at everyone's expense. It's why I only have investment internet message board friends! ;D Usually I get into it with some of them too...as Eric knows! Now that is over...how about we go back to predicting BAC's stock price before Christmas...I'm still swinging for near tangible book, even though the window is closing fast. Cheers! Years ago I explained to this board why I chose ERICOPOLY as my handle. Well, it's because I've been known to debate a topic forever on logic and most people don't have the similar appetite. So I can sort of become the last one carrying on the debate. So it's kind of like a monopolist of discussion. A self-deprecating handle ;)

Perhaps I'm actually a short seller and my plan all along is to get you to make that connection so that I'll be able to cover. Often times when "the shorties" are supposedly driving a stock down on "manipulation", do we ask enough questions to find out whether they are actually just potentially long-only investors that merely want a great entry price? The motivation would be exactly the same, but yet we only ever suspect the shorties.

It occurred to me that perhaps he thinks I'm fucking with him when I say I know very little. The movie Forest Gump is a good place to start. He made a fortune in Apple stock even though he thought he was invested in a fruit company. Literally, I have a low enough self confidence that I have the better wisdom to just copy off the better students in the class. And I'm honest enough to admit it.