BoA Purchase Agreement from Berkshire Hathaway

Wow, I was only slightly aware of the problems at BoA, but this deal must mean that they were having a big problem raising money. You would think they could of had a fire-sale of some assets like their china holdings to better protect shareholders. That being said having Buffet show confidence in your firm is valuable and it paid off well in the past for GE, Goldman and before that Salomon Brothers.

I thought BoA said they didn't need capital...

Maybe Warren thought BOA was a good investment now that Wikileak's BOA "hard drive of secrets" has been "disappeared".

A $5B investment, not an outright purchase.

Given the amount of capital that B&#38;H needs to invest yearly, this is a natural choice.<p>Buffet likes banks, he said so in the book The Snowball (a must read). Banks have float, which is interest free money "floating around" waiting to be invested by the bank, but not owned by the bank.<p>BOA also sells insurance, which has more float than a bank. B&#38;H has a pretty effective group of insurance business people. A lot of the B&#38;H wealth comes from the insurance industry.

That's one hell of a bet. I'm actually surprised that Buffet didn't want to buy the bank's debt offerings (if there are any).<p>I haven't read past the first couple paragraphs (too much legalese) but is there an out clause? If BoA tanks in the stock market, Berkshire could stand to lose a lot of money on the common stock.

First Goldman Sachs, now BoA. Stay classy, Warren.