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RE: LOCAL FIRM, HOME DEPOT, $100 BILLION

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A high-financing FBvian says he thinks the deal would be impossible to pull off:

In order to facilitate one of these transactions, roughly $45-65 billion of the transactional price must be funded by senior commercial bank debt–with commercial banks being regulated by the FDIC and otherwise subject to Federal Reserve Bank requirements. Among such restrictions are limitations on the amount of debt that can be provided to one borrower relative to a bank’s capital base as well as maximum caps that limit loaned amounts within formula-specified “cash flow/interest cost” ratios.

Without the participation by foreign banks not having U.S. regulatory presences on a scale never before seriously contemplated, the entire wherewithal of the American commercial banking system would possibly be tapped out in the attempt to finance this transaction.

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