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Author: brucedoe Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35351  
Subject: Corporate Bonds - Banks Date: 2/9/2009 5:29 PM
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I seem to be hearing that the only way out of our present credit crisis is to wipe out the stock and bond holders of the big banks. When I hear the word bonds, I think this is getting serious. We have a significant slug of a BAC issue and another of a GE issue (which seems to be priced as if it is a bank and did get some bailout money.). To have these two bonds wiped out would really hurt. The BAC bond was rated A+ and the GE AAA. I never got involved in corporate bonds before this decade though I have been investing for more than 50 years. I'm beginning to feel sorry I ever got sucked into getting involved in them.

I still find it hard to believe that BAC will get wiped out. Though I am not one of those who likes to blame the Federal government for everything, I do feel that BAC has been led down the proverbial primrose path in their latest acquisition. I just can't believe that BAC will fail, but that is what people used to say about Pennsylvania Railroad.

And GE is still a profitable company in spite of their financial division's problems. Can you really wipe out their bonds without destroying the entire company?

brucedoe
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Author: jaroman Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25927 of 35351
Subject: Re: Corporate Bonds - Banks Date: 2/9/2009 7:31 PM
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An interesting blog post from an anonymous bond pro discusses the current state of the bank bailout. It appears that the large banks, including WFC, will continue to be supported in some way, the systemic risks in allowing more failures are just too great.

http://business.theatlantic.com/2009/02/geithners_choice.php......

After reading this, I felt a bit better about survival of the bond holders. A bit.....

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