That's My Bank !!!

[marmar]

:(



from Dollars & Sense:



Thursday, February 05, 2009


BoA on Ropes Again: $20 Bn Lifeline Not Enough
by Dollars and Sense

From Bloomberg:

Bank of America Slides to 1984 Levels on Concern for Capital By David Mildenberg

Feb. 5 (Bloomberg) Bank of America Corp., the nation's largest bank, declined to its lowest level in New York trading since 1984 on concern the lender doesn't have enough capital even with a $138 billion U.S. bailout package.

The bank fell 73 cents, or 16 percent, to $3.97 at 10:03 a.m. in New York Stock Exchange composite trading, and earlier declined as much as 20 percent to $3.73, the lowest since October 1984. The stock of the Charlotte, North Carolina-based company has dropped for six straight days and has lost more than two-thirds of its value this year.

The descent follows the U.S. government's latest infusion of $20 billion in new capital and a plan to share losses on $118 billion in mortgages, corporate loans and derivatives. The U.S. previously committed $25 billion to the bank and Merrill Lynch & Co., acquired earlier this year. Bank of America lost $1.79 billion in the fourth quarter, its first deficit since 1991, as more borrowers defaulted on loans.

"Washington is dithering while the banking stocks are going to zero," said Nancy Bush, an independent bank analyst in Annandale, New Jersey. Trading is being driven by speculation that the government may take over Bank of America and other lenders as part of a plan to bolster the nation's financial system, she said.

Scott Silvestri, a spokesman for the bank, wasn't immediately available for comment.

"There is this lurking shadow of nationalization which haunts the banks, but particularly Bank of America," said David Dietze, president of Point View Financial Services Inc. in Summit, New Jersey, in an interview late yesterday. "It's pretty spooky."

Bank of America's risk rose after it acquired Countrywide Financial Corp., the largest U.S. home lender, and Merrill Lynch, the world's largest brokerage, he said. Merrill lost $15.3 billion in the fourth quarter.

http://www.dollarsandsense.org/blog/2009/02/boa-on-ropes-again-20-bn-lifeline-not.html

[Idealism]

1. This isn't even close to over for bank failures

The Commercial Real Estate market is just now starting to melt down...

[BlooInBloo]

2. Um, the commercial real estate market has been melting down for a couple of years.

[Idealism]

7. Not really, its not as cyclical as residential

The re-fi period for CRE is 5 years typically, for comparison. In 2005, business was good...

[BlooInBloo]

13. Cycles have nothing to do with it. And it's trivial to find people talking about...

the shitty commercial real estate (offices, malls, etc.) situation several years ago.

Example requiring 30 seconds to find: http://www.rgemonitor.com/blog/roubini/226654/

[Idealism]

14. A few points:

Mr. Roubini is ahead of the curve as far as events go. He was predicting this bubble years ago.

This article is from late 2007, not exactly "years" ago.

Mr. Roubini often writes of future predictions that don't occur for a few years. Vacancies were average right up until late July of 2008, and only then off marginally. The shoe didn't fall as fast as he expected, perhaps. He predicted from residential sub-prime to commercial sub-prime, with the standard markets of residential not as bad off as the sub-primes on both sides. This didn't quite happen that way, all of residential real estate declined and there are trillions lost already. Commercial has declined in value as well, but it isn't at the same percentage level as residential has, and the apples to oranges comparison of the vacancy numbers of commercial comparable to the foreclosure levels of housing is misleading, as well.

[BlooInBloo]

15. The meltdown happens first. Later, the effects are seen...

No different from when I was at WaMu as an analyst in the MBS group, a few years back. We saw the meltdown coming, we saw it happen, and much later we saw WaMU get eated (jumped ship a few years ago :) ).

And criticizing "years" by going down an order of magnitude to being off by "months" is just dumb. Especially when you're not dead certain I can't take another 30 seconds and satisfy that finer-grained response.

[Idealism]

16. There were many who saw it coming

but seeing the wall and hitting the wall are two different things. CRE didn't hit the wall till very recently, although the fundamentals of the entire real estate market were artificially inflated and skewed for years. Many people could see it didn't make sense, some profited from it and others played it safe and laughed when others weren't so fortunate. Most people didn't see the rotten core. Roubini saw the core and postulated that the CRE market was the next one to "hit the fan," but as I said, all Residential plunged before even sub-prime CMBS dropped in value, which is when the wall is actually hit. The wall isn't hit until the banks realize losses from their assets.

[BlooInBloo]

17. (facepalm)

EDIT: (shrug) You deliberately skip the "we saw it happen" part.

[Idealism]

18. Perhaps I should clarify

The market was rotting from the core for years, just as long as residential has been rotting. But, the meltdown did not happen until very recently. A meltdown is not a gradual thing, a meltdown of a reactor is not drawn out over years, it is immediate. Perhaps you have a different view on what "meltdown" means?

[Warpy]

6. And the worst of the bad paper resets through the middle of 2010

It won't be until then that they'll have any idea how much of their hedge fund derivative trash is any good, at all.

This is likely to get very ugly. I stand by my advice to take a month's worth of cash and stash it someplace that requires a ladder and flashlight to retrieve. I can foresee bank holidays and we'll have to eat.

The worst thing that will happen is that you'll feel silly five years in the future when the crisis is over and you retrieve it for a vacation or some luxury.

[Donnachaidh]

3. wasn't there just a BoA posting saying they would NOT be asking for more funds?

This came right after the notice of ceiling caps for banks asking for more money?

[Earth_First]

4. Yep!

...but fu*k it! The executives will get THEIRS!

[Fleshdancer]

12. and on that thread, I mentioned their upcoming layoffs too

I know a VP over there who said the layoffs are coming soon and everyone is afraid. This was said just a few days ago.

[kenny blankenship]

5. And of course as if on cue, the CEO of DboA says "Oh we won't need more help. January was great!"

"We're doing...great!"

So you know what that means.

[bluestateguy]

8. I'm assuming nationalization would be cheaper than more bailouts?

And that we would not need those pinheads in Congress to do nationalization either?

[Tutonic]

9. Yes! Yes! Yes! This is my bank too.

They have cheated small time customers like me for years. Charge a dollar her, two dollars there, and so on and so on. They robbed poor elderly customers, children and everyone in between. Now its time to watch B of A take a massive nose dive into the history books! I'm gonna splurge tonight and have myself some popcorn!

[arcadian]

10. Bank of Hawaii uses that as a catch phrase

"That's my bank!" That's what I thought this thread ws going to be about, thought maybe they were going under or something.

[BlooInBloo]

11. Excellent time for a pretty picture...

I had to include the rate-of-failure plot because we're only 2 months into this year.