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No. of Recommendations: 15
From today's HoLine;

“Letting Lehman Brothers fail was a huge mistake. Bill Gross, managing director of PIMCO, says the U.S. and global financial systems need credit creation and foreclosure prevention, not bank nationalization. In his March letter, which is posted on the PIMCO website, he adds: "If you thought Lehman Brothers was a mistake, just stand by and see what nationalizing Citi or B-of A would do."

He is, of course, 100% correct. It is time for Washington politicians to stop talking about bank nationalization. Yes, Sweden nationalized banks in the early 1990s and that was successful. But Sweden only has only a few banks and it is a small country. We have 7,500 banks. The Swedish experience cannot be applied to the United States. Nationalizing U.S. banks could turn this severe contraction into something far worse. Fortunately the President is against nationalizing banks and so is Fed chairman Bernanke, who told Congress yesterday: "We don’t need majority ownership to work with the banks. I don’t see any reason to destroy the franchise value."

Bank of America (NYSE: BAC, $5.16). In his second internal memo in the last five days, CEO Ken Lewis reiterated that Bank of America does not need any further government assistance. He emphasized that Bank of America has enough capital, liquidity and earning power to make it through this downturn on its own. He said management is constantly running stress tests to be sure the bank can withstand the deteriorating economy. He didn’t forecast 2009 earnings but he did say that Bank of America would have revenues of more than $100 billion. Lewis recently bought nearly $1 million worth of BAC common stock and said he regards it as an outstanding long term investment. I agree and rate Bank of America as a Buy.

Believe it or not, there is some good news on our economy and financial markets. In November the Federal Reserve owned $138 billion worth of commercial paper. The Fed was buying commercial paper as part of an effort to get that market functioning again. The Fed now owns $15 billion worth of commercial paper. That means the Fed has sold $123 billion worth of commercial paper to private sector buyers during the last two and half months. This is powerful evidence that the Fed has succeeded in returning the commercial paper market to the private sector. This is very important for you and me because it shows that, contrary to all media reports, the Fed is succeeding with its programs to get our credit markets back to normal.”
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