Make no mistake about this: Warren Buffett just saved Bank of America’s bacon.
A few items leap out this announcement:
1) BoA needed both capital and a reputation reboot. Buffett provided a little bit of both.
2) This gives lie to the claim that BofA needed no money
Counter argument — this was about the stock slide, not the capital structure, which remains opaque.
3) The fine print will be revealing of the specifics of the terms, but I am curious as to how this compares to the deal cut with Goldman Sachs (GS) and GE.
4) Buffett met with Obama a few days ago; I wonder what was discussed in THAT meeting.
5) Investors are cautioned that unless you are buying on the same terms as the billionaire, you are making a very different bet than he is.
More to follow later today.
• Buffett Invests $5 Billion in BofA (WSJ)
• Bank of America Says Buffett’s Berkshire Will Invest $5 Billion (Bloomberg)