There is – at this point – a small but not unreasonable chance that Bank of America is headed for insolvency and illiquidity. As always solvency isn’t that big of a deal if no one is looking. However, it does seem that people are looking. And, importantly illiquidity is not materially distinguishable from death.
So what is to be done?
The Federal Reserve and the Treasury should coordinate a bailout of Bank of America, of course.
Will it happen? I can’t say that I am sure.
Apropos of my previous post, there is a very small but again not zero chance that we are be about to see democracy wreak havoc on the lives of billions of people.