Bank of America
The WSJ reports that, as broadly expected, Lehman is not alone in its illegal Repo 105 window-dressing scam: it turns out that Citigroup and Bank Of America also routinely used such shady practices for years. As Michael Rapoport reports, "Citigroup said the misclassified transactions-of $5.7 billion as of the end of 2009, and as much as $9.2 billion over the past three years-involved "a very limited number of our business units" that "used this type of transaction in very small amounts." So its all good - fraud may have been performed but it was just nickel and diming: after all it's not like Citigroup was robbing cemeteries or anything (and since guilt was neither admitted nor denied in that specific case, one can say Citi was never sleeping because it was robbing graveyards but only due to honest mistake). Sure enough, this disclosure come only after the SEC demanded clarification on Repo-105 comparable transactions at all major firms. And with such daily distractions as ten trillions point swings in the market, and crude oil filling up the world ocean, who really cares anymore that all US banks commit fraud on a daily basis. The punchline: "Bank of America and Citigroup say their misclassifications were due to errors--not an attempt to make themselves look less risky." Well, that surely justifies everything.
A completely worthless analysis on quant factors from Bank Of America (probably written in conjunction with David Bianco), which concludes that momentum quants have ruled so far this year. What is amusing is that in the very same report, BofA confirms that Momo outperformance such as the one seen currently and evidenced by the appearance of numerous services catering to momo trading echochambers in twitter and elsewhere, is associated with the Euphoria phase of markets, which usually precedes at least a 20% drop. Brilliant.
An expanded, if conflicted (it comes from one of the pillars of modern-day Keynesianism: Bank of America) overview of the full European bailout by "Europe", which will now rely on the Fed to purchase EU debt and fund hundreds of billions in FX swaps. Can we now drop the charade that the EU is a viable structure, and stop pretending that Europe is anything but America's most recent geographic and monetary acquisition, or is it still too early?
Bank Of America Sees Material Deterioration In Budget Deficit Estimates, Worried About Fiscal Tightening Post Mid-TermsSubmitted by Tyler Durden on 05/02/2010 09:41 -0400
A few days after the economists have had some time to digest the latest GDP numbers, the results are coming in, and they aren't pretty... And to Obama's chagrin they aren't going to get any better. The end of the stimulus "sugar high" is approaching, and most likely will culminate with the mid-term elections: the attached piece by BofA only solidifies this observation. Bank of America, after Goldman, is now the latest major bailed out bank to join the bandwagon decrying US fiscal insanity (oddly enough, few have much to say about the lunatics in charge of monetary matters). And that's just for the medium-term. Speaking of lunatics, for those curious about the long-term, who can summarize it better than the Oracle of Constitution Avenue himself: "Unfortunately, we cannot grow our way out of this problem. No credible forecast suggests that future rates of growth of the US economy will be sufficient to close these deficits without significant changes to our fiscal policies." - none other than B.S. Bernanke. Furthermore, this is the real problem, forget all about G-Pap reelection chances (none to negative): Greece is just a pleasant distraction compared to what would happen if the US can't roll $700 billion in short-term debt each month.
More divergence in opinions between our team and the reporting of the MSM! Failing to provision for loan losses is not the same as making money, is it???
Bank Of America Prepares To Launch Credit Bubble v2.0, Organizes First US Securitization Research ConferenceSubmitted by Tyler Durden on 04/17/2010 18:21 -0400
Bank of America Merrill Lynch is looking forward to your participation in the first annual US Securitization Research Conference. The conference will feature panel discussions, presentations, and breakout sessions. This conference is by invitation only. Clients interested in attending the conference should contact their BAML representative.
Let The Churn In QQQQ, Citi And Bank of America Hit Infinity: ISE To Offer Special Rebates For Liquidity Providers In These Three NamesSubmitted by Tyler Durden on 03/29/2010 15:19 -0400
Today, one quarter of the volume in the market is attributable to trading in Citi shares. This is simply a ridiculous statistic, and shows that the broader equity market, which merely trades based on the momentum of one stock, is and has been busted for about a year, when we first wrote about this phenomenon. Yet this insane churn is not enough for some: The ISE has just announced it is introducing a "Modified Maker/Taker Fee Schedule" for the three most actively traded options products on its exchange: QQQQ, C, and BAC. In essence, the ISE will provide even greater rebates to "liquidity providers" in these three stocks. The entire market will soon consists of exactly two companies (both of which are wards of the state) and one ETF, as liquidity finds the path of least resistance and greatest (evaporating) profit margins. This is what "liquidity" in the market has become. And all the while, the latest DMM, GETCO, which is certainly not frontrunning its prop positions based on massive NYSE flow traffic, is laughing all the way to the bank.
Just because it worked so well the first time around... We can't wait for the totally unexpected mortgage reduction program announced by Bank of America... in 2012.
Breaking from Diana Olick: Bank of America will start offering principal forgiveness programs for most at risk mortgages. The bank will target subprime, pay option, and prime 2 year ARMs, no 30 year loans. Loans must have principal balance at least 120% of the value of the home. As the bank has over 1 million delinquent loans. The hit to BofA's balance sheet will be over $3 billion as the firm will need to write down its existing mortgage book (probably still at 99%) to fair value. Surely this is dictated by the government's desire to add some investor-funded oomph to its taxpayer-funded HAMP disaster. And with that, debt forgiveness for all begins! Max out all your credit cards now because the bank, per Barney Frank, will forgive it all. Oh wait, you already have... Carry on then.
I have a strong feeling that if you dig deep enough into the BofA innards, you will find some stinky stuff. Hey, it's just a feelin'.
Bank Of America Can Not Deny It Used Repo 105, Response From PricewaterhouseCoopers Pending; The BofA QSPE'sSubmitted by Tyler Durden on 03/23/2010 22:50 -0400
A day after the Lehman Repo 105 scandal erupted, one, just one bank stepped up and said it had never used Repo 105-type transactions. The bank was Goldman Sachs. Of course, Goldman's claim is completely useless without a context as the proper refusal would be for Goldman's counsel to say that the firm had not used anything "substantially similar" to a Repo 105. The difference between that and the verbatim phrasing is like night from day. But at least the soundbite chasers bought it, and the whole topic of Goldman and Repo 105 promptly died away. We'll let that be... for now. Yet one bank which not only has not provided voluntary disclosure, but which has now gotten itself bogged down in semantics, after recently speculation had emerged that BofA had used "substantially similar" devices to Repo 105. Today, BofA provided a response on the record as to whether it had (ab)used Repo 105s and it appears, that inasmuch the firm is unable to say no, the answer is a resounding yes.
One of the world's largest pension funds is suing Bank of America for more than $90m over its 2008 takeover of Merrill Lynch, claiming the banking giant failed to disclose the full extent of losses at the US investment bank. It's about time pensions got tough, but is it too little, too late?
- Bank of America Considers Request to Halt Foreclosures for HAMP
- FORECLOSURE HALT PERTAINS ONLY TO BANK-CONTROLLED LOANS
- BOFA'S DESOER CONSIDERS FORECLOSURE REQUEST, SPOKESMAN SAYS
- BOFA'S DESOER MET WITH HOUSING ADVOCATES SEEKING HAMP REVIEWS
- BOFA CONSIDERS REQUEST TO SUSPEND SOME HOME FORECLOSURES
A review of Bank of America's 4th Quarter Call Reports reveals obvious shift of Delinquency Liability to Taxpayers.
We have previously discussed the maturity cliff in Treasuries, Commercial Real Estate, Financials and High Yield. Focusing on the latter, a recent report from Moody's, indicated that there is roughly $800 billion in high yield bonds maturing by 2014. Today, Bank of America jumped on the HY maturity warning bandwagon, discussing the "maturity wall" which while alarming, is estimated by BofA to be $600 billion, or materially less than Moody's estimates. So while not in any way novel, Bank of America does provide a rather convincing view of therelative maturity schedule in HY currently versus the historical average in both loans and bonds. The results should be troubling to all CFOs and PE-owners of highly indebted organizations: absent raising equity rapidly, the ability to roll these loans in a rising interest rate environment will be next to impossible. Because with 89% of loans maturing in under 5 years (compared to 36% on average), and 50% of bonds (37% average), the maturity cliff,whether defined by Moody's or by Bank of America, is fast approaching.