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发帖数: 5516 | 1 Bank of America's Latest Day From Hell
By Dan Freed 08/08/11 - 05:29 PM EDT
NEW YORK (TheStreet) -- Bank of America(BAC_) shares plunged 20.07% Monday,
as investor concerns continued to snowball amid a market selloff, a lawsuit
from AIG(AIG_) and the sale of more than seven million shares by hedge fund
Appaloosa Management.
Analysts including Citigroup's Keith Horowitz defended the stock , though
CLSA's Mike Mayo downgraded the stock arguing the bank may need to raise
equity, according to a report in The New York Times.
Appaloosa Management, the multibillion dollar hedge fund run by former
Goldman Sachs trader David Tepper, sold his Bank of America(BAC), sold more
than 7 million shares, reducing its stake to 10 million shares as of the end
of June, according to a filing with the Securities and Exchange Commission
Monday. A person close to the fund says Appaloosa has cut its stake further
since that time.
AIG says in its lawsuit, filed in New York State court Monday, that fraud by
Bank of America and Countrywide cost AIG some $10 billion in losses on $28
billion in residential mortgage backed securities (RMBS) investments. AIG is
seeking to recoup at least that amount.
The lawsuit is only the latest of tens of billions in similar claims brought
by a host of high profile plaintiffs including government sponsored
enterprises Freddie Mac(FMCC.OB) and Fannie Mae(FNMA.OB), as well as private
companies including BlackRock(BLK_), PIMCO and Goldman Sachs(GS_).
Bank of America sought to defend itself against the AIG allegations in a
statement sent to TheStreet.
"AIG recklessly chased high yields and profits throughout the mortgage and
structured finance markets. It is the very definition of an informed,
seasoned investor, with losses solely attributable to its own excesses and
errors. We reject its assertions and allegations," the statement read.
As for Monday's selloff, spokesman Jerome Dubrowski said that while the bank
has a policy of not commenting on its share price moves, the bank is "a
much stronger company today than it was a year ago and two years ago."
He says the bank has "significantly strengthened" its balance sheet,
liquidity and regulatory capital ratios, while upping its reserves for RMBS
"putbacks" to $18 billion at the end of the second quarter from $4 billion a
year earlier.
Dubrowski notes that five of Bank of America's six businesses were
profitable in the second quarter, earning a combined $5.7 billion.
"There are a lot of things that are going right at Bank of America and they
are somewhat overshadowed by the legacy mortgage issues."
Dubrowski says the bank is "aggressively dealing with," the mortgage issues,
"but nonetheless they are significant issues for us," he says.
Indeed, unless Bank of America can give investors some clear ceiling on the
ongoing costs associated with its mortgage business, even the $18 billion it
has set aside will be scant comfort to investors.
Bank of America sold $1.1 trillion in RMBS to Fannie and Freddie from 2004-
2008. Eleven percent of that total has either defaulted or is more than 180
days delinquent.
http://www.thestreet.com/story/11214229/2/bank-of-americas-late |
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