Banking 101

Why is it so difficult to understand the big banking bailout and the financial situation that makes it “necessary?” Because it’s a different reality from one mere mortals live in.

American Public Media’s Marketplace took a look at Bank of America’s sudden fall from grace. It was one of the survivors of last fall’s big meltdown (making a ton of money), so much so that it gobbled up on of the slower fish — Merrill Lynch.

On Thursday, the banking giant, which practically had to be forced to take some bailout cash at gunpoint last year, reported its earnings for the third quarter of 2007:

The banking giant, which moved up its quarterly report from Tuesday, reported a net loss of $1.79 billion, or 48 cents a share, compared with year-earlier net income of $268 million, or 5 cents a share. Revenue increased 19% to $15.98 billion. Analysts’ estimates were for per-share earnings of eight cents on revenue of $20.71 billion, according to a poll by Thomson Reuters.

Take your current salary. Increase it by 20 percent. Are you better off or worse off now, financially? If you’re better off, you’re not Bank of America.

You’re also not likely to get an amount more than your total income for a second time in three months in the form of a bailout and still have financial experts tell you that may not be enough.

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