Credit Crisis: “Jaws” attacks again.
This morning, investors are digesting a staggering loss and break up of Citigroup (NYSE: C) and another bailout for Bank of America (NYSE: BAC). The credit crisis seems to be playing out like the shark from Jaws.
It just keeps coming. You never know when it’s going to strike. And unlike the theatrical release, we don’t have John William’s soundtrack to warn us.
Citigroup announced a massive $8.3 billion loss and plans to split into two. It’s hoping a “two-face” strategy will work. They plan to make the profitable division into one company, and move all it’s bad assets into another. It’s the perfect solution for value and growth investors. Unfortunately, we think they will be hard pressed to figure out which company is which.
Bank of America is getting another $20 billion and guarantees for more than $100 billion of toxic Merrill Lynch assets. This now makes them the largest recipient of bailout funds.
Just like in Jaws, every time the authorities calm the public down, that’s when the shark strikes. Investors had just started thinking things were getting better. But here’s the interesting thing. In early November, Investment U researchers reasoned that any bank receiving federal bailout funds wouldn’t be allowed to fail.
With Bank of America’s announcement, we are sadly witnessing that come true. To read more, see the “9 Banks the U.S. Guarantees.”
Companies mentioned in this article: C and BAC.
Related Investment U Articles:
- Is Bank of America Playing a “Shell Game” With Its Derivatives?
- How Greek Default Could Double-Dip U.S. Economic Recession
- Five Takeaways From Warren Buffett’s Annual Letter to His Shareholders
- Why Gold Is A Sure, Long-Term Bet
- Proposed European Bailout Plan Comes Up Short
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