Bank of America Is in Deep Trouble and There May Be Financial Disaster on the Horizon

[unhappycamper]

Bank of America Is in Deep Trouble and There May Be Financial Disaster on the Horizon
AlterNet / By Joshua Holland

November 11, 2010 | Will Bank of America be the first Wall Street giant to once again point a gun to its own head, telling us it'll crash and burn and take down the financial system if we don’t pony up for another massive bailout?

When former Treasury Secretary Hank Paulson was handing out trillions to Wall Street, BofA collected $45 billion from the Troubled Asset Relief Program (TARP) to stabilize its balance sheet. It was spun as a success story -- a rebuke of those who urged the banks be put into receivership -- when the behemoth “paid back” the cash last December. But the bank’s stock price has fallen by more than 40 percent since mid-April, and the value of its outstanding stock is currently at around half of what it should be based on its “book value” -- what the company says its holdings are worth.

“The problem for anyone trying to analyze Bank of America’s $2.3 trillion balance sheet,” wrote Bloomberg columnist Jonathan Weil, “is that it’s largely impenetrable.” Nobody really knows the true values of the assets these companies are holding, which has been the case ever since the collapse. But according to Weil, some of BofA’s financial statements “are so delusional that they invite laughter.”

Weil points to the firm’s accounting of its purchase of Countrywide Financial -- the criminal enterprise at the center of the sub-prime securitization market. Bank of America, Weil notes, hasn’t written off Countrywide’s entire value. “In its latest quarterly report with the SEC,” he wrote, “Bank of America said it had determined the asset wasn’t impaired. It might as well be telling the public not to believe any of the numbers on its financial statements.”

With investors valuing BofA at half the worth that the bank claims, it’s one titan of Wall Street that may be on the brink of collapse. But it’s not alone. “Everybody was doing this, this is not just something that Countrywide and Bank of America were doing," legendary investor Jim Rogers told CNBC. As a result, the banks’ balance sheets are "full of rotten stuff" that “is going to be a huge mess for a long time to come.”

[Wounded Bear]

1. I used to bank with them....

Now my pitiful assets are with a small, more local credit union.

Fuck 'em.

Once again, we'll be held hostage.

[Wounded Bear]

4. I should expound on this...

I really feel for the tellers and other rank and file that work for BofA. They'll get screwed while the banksters at the top will walk away with golden parachutes. Whatever happens, bailout or not, the ones who really deserve it won't feel the pain.

[uncommon]

2. The branch near my house closed.

Not sure if that has anything to do with anything, but it was there for a long time, ever since they took over Fleet Bank in the area.

I use TD Bank which is still basically evil but at least they are open 7 days a week.

[RockaFowler]

3. F-U Bank of America

Sorry I have no sympathy for these thieves. They could care less for their customers. They could care less for your banking security. And they could care less if you lost your home illegally. I say good riddance. Anyway - I want Barnett Bank back. They at least cared for their customers and the reason we went to them to begin with.

[KharmaTrain]

5. The Shit Sandwich Again...

And, yes, I expect another bail out on the way. Unfortunately too big to fail means that. If they default, billions of investor and depositor dollars are at risk and any disruption in this money could created economic havoc all across the board and across the country. The inability to get the cash to cover payroll or operating expenses could turn this economy from bad to real ugly in a hurry.

This situation shows that bail-outs are a stop gap for a bank that is still drowning in bad mortgages, debts and other speculation. Until there's a way that this debt is worked out, these problems will continue (and at other banks). Shame on this administration for not working to help work out this debt bomb that is at the heart of our economic stagnation...the longer this continues, the more people who are pulled under and the longer it will take for any true recovery to happen.

While I'd like to see some of these banks either go bust or broken up...the consequences to the working class would get hit the hardest...as usual.

[safeinOhio]

6. The neo-cons new found lap dogs,

the tea drinkers and libertarians are going to jump up and bite them. There will be no more bank bail outs to save the rich s.o.bs this time. They needed these groups to insure their tax scams, now there will be nothing to tax and no breaks for the corporation.

[Kablooie]

7. The economy has to be allowed to collapse before it can be built again.

If they keep the tax cuts for the rich and bail out any banks again I will vote third party and stop supporting democrats.

[Matariki]

8. Bail them out the way we bailed out GM. That is - OWN THEM.

[Rex]

9. Enron led the way for all this bullshit to happen.

I can't believe the biggest crime spree in recent history is about to happen again!!! I guess the uber wealthy won't be satisfied until there is no middle class left! ANYWHERE! ON THE GLOBE.