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    This report has been prepared by Banc of America Securities LLC (BAS), member FINRA and SIPC. BAS is a subsidiary of

    Debt ResearchCross Product

    January 2, 2009 Cross-Product

    Research AnalystContributors

    Jeffrey Rosenberg

    (646) 855 7927

    Mike Cho

    (646) 855 6302

    Hans Mikkelsen

    (646) 855 6468

    Economists

    Gary Bigg(646) 855 1980

    Peter Kretzmer(646) 855 1046

    Mickey Levy(646) 855 1045

    Situation RoomThe Bailout Guide

    The Bailout Guide. We provide an updated version of our bailout guidesummarizing the panoply of government intervention efforts to date in one singlespot. The economic consequence of these combined actions, we estimate, is thatthey provide more than 70% government support of bank liabilities in addition tothe $315 billion capital in the form of preferred stock. Jeffrey Rosenberg, HansMikkelsen, Mike Cho.......................................................................................... (Page 5)

    Equities and Credit Gain Over Last Two Weeks. On the first trading day of thenew year, equities gained as the S&P 500 closed up 3.2% to 932. Credit waslargely unchanged, with the CDX IG remaining at 198 and CDX HY up slightly at80 . Week over week, the S&P 500 has rallied nearly 7% while CDX IG hastightened 5 bps and CDX HY is up 1 pt. Since Friday, December 19, the S&P500 has climbed 5% while CDX IG has tightened 15 bps and CDX HY is up 3 pts.

    Mike Cho .......................................................................................................... (Page 3)

    Record Low Confidence, More Housing Declines but Hope for Spending?2008 ended with the U.S. in severe recession. With labor market conditionsdismal, Conference Board consumer confidence hit an all-time record low inDecember. The long fall in housing also continued late in the year, as sales

    plummeted and home price declines reaccelerated. However, five months ofdecline in inflation-adjusted consumer spending ended in November, a sign thatthe huge declines in energy costs are providing some consumer relief and theworst of the adjustment to large wealth declines may be past. But we do notexpect a quick consumer-led recovery. Peter Kretzmer, Mickey Levy,Gary Bigg............................................................................................................................ (Page 33)

    The factory recession continued to worsen in December, as the ISMmanufacturing index recorded a 5th consecutive below-50 reading. The

    composite index fell to 32.4, while new orders fell at a record-setting pace.Export orders also continued to weaken at an accelerating pace last month as didinput prices. Peter Kretzmer ........................................................................ (Page 34)

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    Bank of America Corporation. This report is intended for sophisticated institutional investors and equivalent professionalsin the fixed income market only.

    Please see the analyst certification and important disclosures on page 37 of this report. BAS and its affiliates do and seekto do business with companies mentioned in their research reports. As a result, investors should be aware that the firmmay have a conflict of interest that could affect the objectivity of this report. Should investors consider this report as afactor in making an investment decision, it must be considered as a single factor only.

    Any portion of this report that has been prepared by a desk strategist or an economist is NOT a product of the debtresearch department and is NOT covered by the research analyst certification provided on page 37. For additionalinformation concerning the role of trading desk strategists and economists, please see the important conflicts disclosuresbeginning at page 36 of this report.

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    Cross-Product Research 35January 2, 2009

    Situation Room 2

    Table of ContentsResearch Overview The Situation .................................................................................................................................... 3

    Equities and Credit Gain Over Last Two Weeks .................................................................................................................. 3Credit Strategy........................................................................................................................................................................ 4

    The Bailout Guide................................................................................................................................................................. 5Congressional Interventions: EESA and HERA ................................................................................................................... 5

    Emergency Economic Stabilization Act (EESA) of 2008................................................................................................. 5Housing and Economic Recovery Act (HERA) of 2008................................................................................................... 5Hope for Homeowners ...................................................................................................................................................... 6

    Treasury Interventions .......................................................................................................................................................... 8FDIC Deposit Insurance Limit Increase............................................................................................................................ 8Temporary Liquidity Guarantee Program (TLGP)............................................................................................................ 9

    Guaranteed Performance..................................................................................................................................................... 10Guarantee Program for Money Market Funds................................................................................................................. 11Troubled Asset Relief Program (TARP) ......................................................................................................................... 12Treasury Programs Under TARP .................................................................................................................................... 13The Heart of Financial Market UncertaintyInsolvency............................................................................................... 13The Expanding Safety TARP.......................................................................................................................................... 14Toward a Final Version of TARP ................................................................................................................................... 15Company Specific Bailouts............................................................................................................................................. 17The Citi Bailout............................................................................................................................................................... 17The AIG Bailout.............................................................................................................................................................. 18Auto Bailout .................................................................................................................................................................... 19DIPping Into the TARP................................................................................................................................................... 19GMAC Bailout ................................................................................................................................................................ 20Three Steps to Complement Fannie/Freddie Conservatorship........................................................................................ 21What Is a Conservatorship?............................................................................................................................................. 21

    Federal Reserve Interventions: Supporting Funding........................................................................................................... 22Funding From the Fed ..................................................................................................................................................... 25Asset Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF)....................................................... 26Commercial Paper Funding Facility (CPFF)................................................................................................................... 26

    The CPFF in Short........................................................................................................................................................... 27Money Market Investor Funding Facility (MMIFF) ....................................................................................................... 28Term Asset-Backed Securities Loan Facility (TALF) .................................................................................................... 29Clarification on TALF..................................................................................................................................................... 29Leveraging the TARP...................................................................................................................................................... 30GSE Direct Obligation & MBS Purchase Program...............................................................