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Wow, I was only slightly aware of the problems at BoA, but this deal must mean that they were having a big problem raising money. You would think they could of had a fire-sale of some assets like their china holdings to better protect shareholders. That being said having Buffet show confidence in your firm is valuable and it paid off well in the past for GE, Goldman and before that Salomon Brothers.

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If they were having real problems, Buffett wouldn't invest. He likes to buy stock in solid companies that are going through temporary rough times and are thus unloved by the market (selling at bargain prices, like American Express after the salad oils scandal).

They were certainly having a problem of confidence, which can be very bad for highly leveraged financials, and Buffett's reputation helped restore some confidence.

Buffett is very shrewd. He invested in Goldman Sachs and GE during the collapse, but he refused to put a dime in Dick Fuld's Lehman Brothers.

This is why Berkshire Hathaway has been earning over 20% annually (on average) for multiple decades. He can get terms that nobody else can, but even then, he knows when it's investment and when it's speculation.

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