Cat is Out of the Bag: BofA in Trouble

From Mish: Is Bank of America The Next Citigroup?

As Citigroup Goes To Sleep attempting to sell off everything but stripped down core applications, the number of strong banks ready, willing, and able to absorb the pieces is now down to zero.

Bank of America is already choking on Countrywide Financial and Merrill Lynch. JPMorgan is choking on Washington Mutual and a mass of derivatives a mile thick. Wells Fargo needs to digest Wachovia's mass of toxic pay option ARMS.

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Meanwhile Bank of America is now so bloated with accumulated toxic waste it needs another taxpayer bailout. Is this a great strategy by the Fed and Treasury or what?

And from Calculated Risk: Another Bailout for BofA (Sounds like a severe case of indigestion and the earlier Countrywide acquisition can't be helping too.)

US Negotiating More Aid for Bank of America (WSJ).

The U.S. government is close to committing billions in additional aid to Bank of America Corp. as the nation's largest bank by assets tries to digest its Jan. 1 acquisition of Merrill Lynch

...... Bank of America ... told the U.S. Treasury Department it was unlikely to complete its purchase of the ailing Wall Street securities firm because of Merrill's larger-than-expected losses in the fourth quarter...

Any possible arrangement might protect Bank of America from losses on Merrill's bad assets. There would be a cap on the amount of losses the bank would have to absorb with the federal government being on the hook for the remainder.