Financial Services Question
What will happen to Bank Of America bond holders if the bank is nationalized by the government?
Asked by Intern in
Financial Services
10 months ago
Stocks referenced: BAC
Answers
825 points
Dragonsbane answered 10 months ago …
It would depend on the conditions imposed on Bank of America share and debtholders by the government upon nationalization. Chances are the United States government would assume the liabilities of Bank of America ensuring that the bondholders whole. The government could restructure the bonds for Bank of America making them worth less than face value, but this is unlikely because it would scare private capital away from the banks at a time when they desperately need capital.
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