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No. of Recommendations: 13
People should stop and think about BAC's capital and capital generation for a minute.

For BASEL III, fully phased in, every 1% of required capital is $18 billion. Banks will be required to hold a base level of 7% Basel III by 2019.

BAC and other larger banks are required to hold a 2.5% buffer on top of this 7%... For BAC, that's $45 billion of capital on top of the required minimum.

If you think about the fact that BAC will always have billions of reserves at any given time, and that they generate capital every day, amounting to about $9 billion per quarter... How on earth is BAC under capitalized? Somehow people fail to see that crappy 2006/2007 loans burn off every month. The majority of them are gone. Today's loans are very solid, whether they be credit card, mortgage, whatever...

Simply to eat through one years worth of pre tax pre provision capital and the $45 billion SIFI buffer would take nothing short of a complete global meltdown.... and that's just to get BAC down to it's base level of 7%.

The banks today, are building towards nothing short of indestructibility. People treat them like they are toxic sludge. Even JP Morgan, the best of the best is at 6 times forward earnings. They, JP Morgan already have nearly the full amount of capital they will need for BASEL III right now, six years early! No one seems to want to own them either.

The market is offering the ability to make a fortune here with the banks, and it's really and all or nothing bet.. Either the world moves forward and people who buy banks today make a fortune, or the world, capitalism as we know it, comes crashing down.... I've never known it to pay to bet on the end of the world... It only happens once, and my friends, This isn't it.
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