Wednesday, 10 August 2011

Remember the panic before Lehman Brothers Bankrupty?

Do you still remember the panic before Lehman Brothers Bankruptcy? Lehman Brothers were frantic looking at different solutions to shore up their capital in bid to remain solvent, including the options of getting foreign sovereign wealth fund to buy over the bank. Today, after 3 years of that horrified experience, Bank of America is facing the same issue here. Reports from Reuters mentioned that the giant bank is looking for sovereign wealth funds to sell its $17 billion China Construction Bank stake, especially after these 2 weeks of drop in it's share price listed on NYSE. As posted in Zerohedge, rumors spread was that it's urgent in need of cash to beef up it's capital, as well as the bank's capitalization may be urgently strapped soon.

So folks out there, if you can recall the stages that led to Lehman's bankruptcy, Bank of America currently situation is a little too similar with comfort.

Perhaps any Too Big to Fail might happen again. Those who still believe that the backlash in the equity market maybe temporary, think twice.

Renomic

No comments:

Post a Comment