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Holly LaFon
Fox Business
Articles (7910) 

Dick Bove Tells Fox Business Warren Buffett’s $5 Billion Bank of America Investment Was the 'Biggest Rip-Off' You Can Imagine

March 13, 2012 | About:

Rochdale Securities financial analyst Richard Bove spoke with FOX Business Network (FBN) about Berkshire Hathaway CEO Warren Buffett’s $5 billion investment in Bank of America (NYSE:BAC). He said, “I personally thought that was the biggest rip-off of Bank of America shareholders you can imagine.” Excerpts from the report are below.

On how much Warren Buffett’s $5 billion Bank of America (NYSE:BAC) investment had to do with the Federal Reserve perceiving the bank as a company that has more strength on its balance sheet:

“I personally thought that was the biggest rip-off of Bank of America shareholders you can imagine. It was not right; it was the wrong thing for them to do. I think what the Fed is looking at is the raw numbers. The raw numbers will tell you that Bank of America has roughly about $360 billion in cash and government backed securities. What the raw numbers tell you, these companies have cash, have capital, are seeing deposits increase, are seeing loans increase and are seeing bad loans go down and coming close to record earnings…At some point the market has to recognize that.”

On if Bank of America will raise its dividend next year:

“Bank of America has already indicated they did not request an increase in dividends this time around and I believe they will request it in January of next year when they do the next stress test.”

On if Bank of America will announce buybacks in 2012

“I don’t think so.”


Rating: 2.8/5 (11 votes)


Coda - 5 years ago    Report SPAM
It's true,it's a rip-off but we have to say that bac had difficult times and they needed those 5 billions to restructure the liabilities,Buffett was just opportunistic.We have evidence that equity offerings usually end up in bigger dilution in difficult times.So nothing to say against Buffett I would have done the same...

The bad thing is that the deal was private they should have auctioned the preferred....I'm pretty sure Fairholme would have considered the issue at a lower yeld,so I don't like the way they have dealt with this thing.
BilGru - 5 years ago    Report SPAM

What a surprise that Fox News had something bad to say about Warren Buffett. And I suspect that an auction of debt by a major bank back when Berkshire bought it would have been extremely unpopular. Try to remember the general mentality back then concerning the entire financial system in this country.

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