My thoughts on Bank of America (NYSE: BAC)

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Bank of America is back in the news because they asked and got $20 billon from US govement, to back the loss from Merrill Lynch acquisition.

(Source: Yahoo Tech-ticker)

Personally I like Bank of America, ever since I became their customer serveral years ago. Two benefits of being BoA checking acct cosumer: 1) Their branch and ATMs are all over the country; 2) In addition to that, since I travel to China once a while, I like the fact I can withdrawl Chinese Yuan (RMB) from China Construciton Bank (CCB is BoA Chinese partner), without transaction fees. CCB is also a large bank in China and their ATMs can be found in many places.

Now to the investing of BoA (NYSE: BAC). Did I say investing? With the stock price of BoA approach to $7, it seems to me it’s more and more like speculating. I remember someone (Jim Cramer?) once said any bank stock traded under $5 is speculative.

I agree with that statement. When BoA made the CountryWide acqusition, I was a little surprised. But when they announced the Merrill deal on Sept. 16 weekend (the weekend Lehman went bankrupt), I was puzzelled by its CEO’s quick decision. At the time I suspect BoA got two things going:

1) They liked MER, the brokerage business;

2) They were either under pressure from Treasury (Paulson) to do the deal, or they got words from Treasury (about gurantee the loss from MER) to do the deal.

Now it is apparent point 2 is valid. Nothing wrong with Nationalization of banks, in fact the nation banks in China (e.g., CCB) did ok in this economy downturn. But I guess this is different in the US. The US economy lives or dies on the private business and entrepreneurship. Now some of the financia large institutions (Citi and BoA), the heart of this country economy, got largely nationalized.

(Yupoo: China Construction Bank in Shanghai)

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