Q&A: Bank of American Is a Bust

Here’s a Q&A from my Blue Chip Growth website:

Q: How can Bank of America (BAC) survive the credit crisis?

A: In my opinion, it can’t. There are too many bad mortgages, too much toxic debt on this company’s books. Even if the company can stagger through the near term, the government is nationalizing BofA and Citigroup in slow motion because of the conditions created in exchange for the initial cash infusion in fall 2008. Unless Bank of America can repay Uncle Sam in five years, the government’s preferred shares will convert to common shares and we taxpayers will be running the show. Worst-case scenario is that the government will step in much sooner–and with a much bigger price tag.

If you’re asking this because you own BAC shares, I regret to tell you that your investment is a bust. Try to sell on an up day, but make sure you sell them soon.

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