Sunday, February 28, 2021
  • About Us
  • Contact Us
  • Terms of Use
  • Privacy Policy
  • CCPA
  • DMCA
News Two Daily News
  • Home
  • Headlines
  • US News
  • World
  • Sports
  • Business
  • Technology
  • Entertainment
  • Science
  • Health
No Result
View All Result
  • Home
  • Headlines
  • US News
  • World
  • Sports
  • Business
  • Technology
  • Entertainment
  • Science
  • Health
No Result
View All Result
Morning News
No Result
View All Result
Home Business

Warren Buffett plowed $5 billion into Bank of America during the debt crisis. Here’s

  • Sponsored results for Warren Buffett plowed $5 billion into Bank of America during the debt crisis. Here’s

  •  
October 17, 2020
in Business
Warren Buffett plowed $5 billion into Bank of America during the debt crisis. Here’s


warren buffett

Alex Wong / Getty Images

  • Warren Buffett invested $5 billion in Bank of America in August 2011, providing a crucial vote of confidence and cash cushion to the struggling lender.
  • The famed investor and Berkshire Hathaway CEO had the idea to invest while taking a bath, and was initially blocked by a call-center worker before getting through to Bank of America CEO Brian Moynihan.
  • The pair signed a deal within 24 hours that centered on Berkshire receiving preferred shares and stock warrants in exchange for its cash.
  • Berkshire exercised the warrants in 2017 and covered the cost by redeeming its preferred shares, giving it a stake worth more than triple its initial investment.
  • Bank of America remains Berkshire’s most-valuable holding after Apple.
  • Visit Business Insider’s homepage for more stories.

Warren Buffett plowed $5 billion into Bank of America during the US sovereign-debt crisis in 2011, shoring up confidence in the embattled lender and striking one of the most lucrative deals of his career.

Here’s the story of how the billionaire investor and Berkshire Hathaway CEO stepped in to help one of America’s biggest banks and made a fortune in the process.

A bathtub, a call center, and a billion-dollar deal

Buffett was taking a bath in late August 2011, reflecting on his investments in American Express and Geico during difficult periods for both companies, when he had the idea to bet on Bank of America, Fortune reported.

The investor tried to get through to the bank’s CEO, Brian Moynihan, but was initially blocked by a call-center worker.

“Warren asked to speak to me and of course they don’t transfer everybody who calls the call centers to the CEO’s line,” Moynihan told David Rubenstein in a Bloomberg interview last year.

Buffett eventually got through to Moynihan and proposed an investment in his company. Moynihan replied that Bank of America didn’t need the capital.

“I know, that’s why I’m calling,” Buffett responded, adding that accepting his money would provide stability, a stamp of approval, and a cash cushion.

Moynihan concurred, and the pair signed a deal less than 24 hours after speaking for the first time. Buffett’s cash hit Bank of America’s account a couple of days later.

Read more: Nancy Zevenbergen is in the top 1% of investors over the past 5 years. She breaks down what she looks for in young companies — and shares 4 stocks she thinks could be market leaders 10 years from now.

Warren got his warrants

Buffett and Moynihan agreed that Berkshire would hand $5 billion in cash to Bank of America, in exchange for $5 billion worth of preferred shares, redeemable at a 5% premium and paying a 5% annual dividend.

Berkshire also received stock warrants giving it the right to buy 700 million of the bank’s common shares at a price of $7.14 per share. The warrants could be exercised at any point over the next 10 years.

The deal terms echoed Buffett’s bailouts of Goldman Sachs and General Electric during the 2008 financial crisis. The investor demanded preferred stock and warrants in those cases too.

Buffett outlined his rationale for betting on Bank of America in his 2011 shareholder letter.

“Some huge mistakes were…



Read More News: Warren Buffett plowed $5 billion into Bank of America during the debt crisis. Here’s

Tags: AmericaBailoutsbankBank of AmericaBerkshire HathawaybillionBrian MoynihanBuffettcrisisdebtFinanceFinancial CrisisHeresinvestingMarketsplowedUK WeekendWarrenWarren Buffett

Related Posts

Covid-19 Live Updates: U.S. Awaits F.D.A.’s Green Light for Johnson & Johnson’s
Business

Covid-19 Live Updates: U.S. Awaits F.D.A.’s Green Light for Johnson & Johnson’s

February 27, 2021
U.S. SEC suspends trading in 15 securities due to ‘questionable’ social media
Business

U.S. SEC suspends trading in 15 securities due to ‘questionable’ social media

February 26, 2021
Why the sacking of Petrobras’s boss spooked markets
Business

Why the sacking of Petrobras’s boss spooked markets

February 26, 2021
Stock markets ‘look frothy,’ but Standard Chartered CEO sees no reason to panic over
Business

Stock markets ‘look frothy,’ but Standard Chartered CEO sees no reason to panic over

February 25, 2021
LIVE: Fed Chair Powell testifies before the House Financial Services Committee on
Business

LIVE: Fed Chair Powell testifies before the House Financial Services Committee on

February 24, 2021
Texas electricity retailer Griddy hit with $1 billion lawsuit for ‘price gouging’
Business

Texas electricity retailer Griddy hit with $1 billion lawsuit for ‘price gouging’

February 23, 2021

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Trend Today

Suspect killed in shootout with officers in Midvale, 3 others arrested

Suspect killed in shootout with officers in Midvale, 3 others arrested

September 19, 2020
Peru President, Martín Vizcarra, Survives Impeachment Vote

Peru President, Martín Vizcarra, Survives Impeachment Vote

September 19, 2020
US to declare UN sanctions reimposed on Iran despite disagreement from allies

US to declare UN sanctions reimposed on Iran despite disagreement from allies

September 17, 2020
Presentation Pac-12 presidents and chancellors saw before postponing sports featured

Presentation Pac-12 presidents and chancellors saw before postponing sports featured

September 18, 2020
Hurricane Sally unleashes

Hurricane Sally unleashes

September 16, 2020

EDITOR'S PICK

NPR Cookie Consent and Choices

NPR Cookie Consent and Choices

January 14, 2021
Ice Bucket Challenge co-founder Pat Quinn has died at age 37 after battle with ALS

Ice Bucket Challenge co-founder Pat Quinn has died at age 37 after battle with ALS

November 23, 2020
Ravens-Steelers game moved from Thanksgiving to Sunday

Ravens-Steelers game moved from Thanksgiving to Sunday

November 25, 2020
Rev. Al Sharpton, 66,  files for divorce from his estranged wife 17 years after their

Rev. Al Sharpton, 66,  files for divorce from his estranged wife 17 years after their

February 12, 2021

Headlines

As rising Treasury yields spook stock investors, March looms like a lion

As rising Treasury yields spook stock investors, March looms like a lion

February 27, 2021
U.S. Attorney For Connecticut John Durham Resigns

U.S. Attorney For Connecticut John Durham Resigns

February 26, 2021
Federal judge rules eviction moratorium is unconstitutional

Federal judge rules eviction moratorium is unconstitutional

February 26, 2021
Researchers find worrying new coronavirus variant in New York City

Researchers find worrying new coronavirus variant in New York City

February 25, 2021

Sports

All eight Patriots who opted out of 2020 season returning in 2021 – The Boston Globe

All eight Patriots who opted out of 2020 season returning in 2021 – The Boston Globe

February 27, 2021
Durant (hamstring) out through All-Star break

Durant (hamstring) out through All-Star break

February 26, 2021
KINGS at KNICKS | FULL GAME HIGHLIGHTS | February 25, 2021

KINGS at KNICKS | FULL GAME HIGHLIGHTS | February 25, 2021

February 26, 2021
Tiger Woods likely faces lengthy recovery after car crash, experts say

Tiger Woods likely faces lengthy recovery after car crash, experts say

February 25, 2021

World

Iran claims US bombing in Syria will strengthen ISIS

Iran claims US bombing in Syria will strengthen ISIS

February 27, 2021
Philadelphia eases some restrictions; limited sports attendance to be allowed

Philadelphia eases some restrictions; limited sports attendance to be allowed

February 26, 2021
The Coronavirus Is Plotting a Comeback. Here’s Our Chance to Stop It for Good.

The Coronavirus Is Plotting a Comeback. Here’s Our Chance to Stop It for Good.

February 26, 2021
Singapore: Police officer’s wife admits to killing Myanmar maid

Singapore: Police officer’s wife admits to killing Myanmar maid

February 25, 2021
  • About Us
  • Contact Us
  • Terms of Use
  • Privacy Policy
  • CCPA
  • DMCA

© 2020 Newstwo.net

No Result
View All Result
  • Home
  • Headlines
  • US News
  • World
  • Sports
  • Business
  • Technology
  • Entertainment
  • Science
  • Health

© 2020 Newstwo.net

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.

We respect your privacy and take protecting it seriously