Monday, January 19, 2009

At The Same Time Bling of America Was Asking for More Fed Bailout, It Was Approving Payment of Dividends to "Preferred" Stockholders

This news just makes my taxpayer's blood boil. How in the hell can already bailed out Bank of America afford to pay "preferred" dividends (which get paid before stockholders get their dividends) while they are begging for billions more in bailout capital to subsidize their foolish purchase of Merrill Lynch?

Matthew Goldstein prescribes the proper antidote:
why shouldn’t [BofA] be forced to cut its outlays to the bone first? After all, analysts are saying even banks with relatively healthy balance sheets, like Wells Fargo, may have to trim their dividends. As of right now, BofA, even after cutting its dividend in half in October, still boasts a hefty payout of 32 cents a share. Even at that reduced amount, the dividend is equal to the sum the bank was paying shareholders in 2003. When the bank slashed the dividend in October, it said the move would save it about $1.4 billion a quarter in badly-needed capital. By that math, eliminating the dividend altogether would say about $2.8 billion in capital a quarter. The bank declined to comment.
Of course, they declined to comment because right now the federal government is funneling them money with no strings attached. Why draw more critical attention to their gold digging?

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