Just having a quick look through the thread and couldn't see any mention of the fact that Interactive Brokers use BAC in Sydney for Aussie deposits. What is the circumstance in regards to this IF BAC went down? For memory, i have read on another thread that your money is in trust, can someone confirm this?
Thanks for the link SKC.
Interesting comment within the page - "Futures, options on futures, and single stock futures are not covered, but available cash will be swept from your futures account to your securities account periodically to take advantage of SIPC and excess SIPC coverage to the greatest extent possible. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities."
To me that means you still own your shares, but if the shares fell from $10 to $5 while the broker-dealer is broke and you have no access to sell the shares, that loss is not protected.
BAC's share price is looking a bit sick.
This is why we look at fundamentals, and not charts, to tell if a company is going bankrupt or not.
JM.
That $5 billion may be actually from the
Fed, using Buffett to inject confidence in the markets.
With Billions of $$ on the Buffett, any rumour of BAC's demise must appear greatly exaggerated.
How Greece must loathe not having a Buffett on board. Instead, she is weighed down by tycoons and heirs of tycoons who want to enjoy their Billions without sharing even a nano-cent with their compatriots. But then again - who would be willingly pay taxes in support of a lazy government when there are so many neighbours working their butts off to avoid becoming collateral damage...
He bought preferred stock, which will pay him a nice 6% dividend. By holding preferred stock, he is also senior to common stock in the capital structure. So if Bank of America does have to take huge write-offs of inflated asset values in the future, Buffett and Berkshire won't get hit.
For his $5 billion, Buffett is also getting the right to buy a staggering 700 million Bank of America common shares at $7.14 a share--options that are already in the money. This represents 7% dilution to Bank of America's common stockholders.
In other words, Buffett is getting a preferred security paying 6% a year that is protected from dilution from future capital raises AND an option to buy 7% of the company--all for $5 billion.
Warren Buffet didn't buy common stock. His deal is not representative of the plight of the ordinary common share holder.
Well you have to admit he knows how to swing a deal.
joea
The strong aussie dollar and the potential upside could make it a very lucrative bet if willing to wait 5 years.
Thoughts?
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