New York – Warren Buffett makes an overnight decision to toss $5 billion into the ring in buying preffered stock in Bank of America , but with $700 million in warrants, a 6% dividend and 5% premium on his share conversion, in the long run it will be costly to the bank’s shareholders.

Few Americans have the cash to make an overnight decision to invest $5 billion in a bank other than Warren Buffett, while at the same time holding his hand over his heart and saying, “it’s not 2008 and this is good for America.”

But the reality of the deal is Bank of America shareholders will have to pay Buffett $300 million a year in dividends and another 5% premium on his principal when he converts to common stock.

Oh sure, you can argue that he saved the bank.  But did BAC really need saving?   Its book value was well over $8.50 per-share and Warren [The Bold] bought into the deal when the Bank’s stock was under $7 to see it drive up more-than 24% this morning.  The only ones cheering where investors in the market.

The reaction caused gold to drop even further this morning and along with it, hundreds of mining companies shares, though the equity market rallied.  But Buffett could care less about the miners as he’s not long gold or gold stocks.

Buffett’s $5 billion investment lift equities - including his own porfolio – making his investment give an unattached premium to his other holdings.

You have to admire Buffett’s cunning.  There was more to his approach than an opportunity to generate a good return for his money.

If Buffett was waving the flag of patriotism when he made the decision to invest in Bank of America – overnight – then where are his well-heeled billionaire buddies?  Shouldn’t they too be following in Buffett’s footsteps?  Come on, America, let go your purse strings and follow Warren Buffett into the market!  Let’s all ride the gravy train!  Not that it will create jobs, though it might save them.

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