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Spot Bank of America's "One-Time, Non-Recurring" Litigation Charges

Tyler Durden's picture




 

The reason why "one-time, non-recurring" charges are traditionally excluded from a company's adjusted bottom line calculation is because they are, at least in theory, one-time and non-recurring. So, after looking at the chart below which breaks out Bank of America's quarterly litigation charges alongside its net income, can someone please explain to us why anyone is still showing the bank's pro forma EPS excluding litigation charges?

Just to put it in context, in the past 2 years, Bank of America has incurred $20 billion in litigation charges. Its net income during this period: $11.9 billion.

And adding insult to injury, just as we were going to press, this hit:

  • BOFA SAID TO OFFER $13B TO SETTLE MORTGAGE SECURITIES PROBE:WSJ

Which means before the end of 2014, litigation charges for Bank of America since 2012 will rise to over $30 billion! And we thought JPMorgan was bad...

 

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Wed, 07/16/2014 - 10:25 | 4962503 Sudden Debt
Sudden Debt's picture

Its net income during this period: $11.9 billion...

 

so people depossited 11.9 billion on their saving accounts and the banks just sees it as a income...

Wed, 07/16/2014 - 13:46 | 4963419 Boris Alatovkrap
Boris Alatovkrap's picture

Exclusion of Legal Charge for calculation of EPS is like whore is exclude open lesion of festering venereal disease in prostitution of service. Caveat emptar!

Wed, 07/16/2014 - 10:26 | 4962507 alien-IQ
alien-IQ's picture

How the fuck do you get enough evidence to demand a 13 billion dollar fine, but not enough to put anybody in fucking jail?

It's not a fine, it's a fucking bribe!

Wed, 07/16/2014 - 10:30 | 4962530 Sudden Debt
Sudden Debt's picture

or the staff who have company cars got A SHITLOAD of parking and speeding tickets...

 

Wed, 07/16/2014 - 12:00 | 4962825 Clint Liquor
Clint Liquor's picture

It's not a bribe. It is 'protection money'.

Wed, 07/16/2014 - 13:48 | 4963438 Boris Alatovkrap
Boris Alatovkrap's picture

Is masterful puppet show theater for consumption of masses.

Wed, 07/16/2014 - 10:33 | 4962539 LawsofPhysics
LawsofPhysics's picture

"It's not a fine, it's the cost of doing business" - FIXED.

 

And that, in a nutshell is why bankers like Jamie Dimon are "richer than you"

being rich today has nothing to do with creating products of real value...

Wed, 07/16/2014 - 11:21 | 4962687 Bernoulli
Bernoulli's picture

For sure it's not a "punishment".

These fines are an excellent way of extracting cash from the banks and wiring it to the government right in front of our eyes.

On what balance sheet will those fines be booked? And what will they be spent for?

And another big question is: What do the banks get in return for all that money?

But the most absurd thing is that at the same time the public thinks:

"Great, the government is "acting" and they are being "tough"! I believe now that our banking system is more safe than before!"

WTF

Wed, 07/16/2014 - 12:05 | 4962845 KnuckleDragger-X
KnuckleDragger-X's picture

Prison is for the little people...

Wed, 07/16/2014 - 10:26 | 4962508 Bearhug Bernanke
Bearhug Bernanke's picture

Jail time would be better.

Wed, 07/16/2014 - 13:50 | 4963446 Boris Alatovkrap
Boris Alatovkrap's picture

In USSA, jail time is better, because satellite TV, three solid meat each day, and library for obtainment of university degree.

Wed, 07/16/2014 - 10:26 | 4962509 1stepcloser
1stepcloser's picture

if you have one time but different litigation charges every quarter, its all good LOL

Wed, 07/16/2014 - 10:27 | 4962512 Cognitive Dissonance
Cognitive Dissonance's picture

".....can someone please explain to us why anyone is still showing the bank's pro forma EPS excluding litigation charges?"

Ummmm.....for the same reason a dog licks his neither region. Cus it feels good and the bonus is great too.

Wed, 07/16/2014 - 10:30 | 4962528 Reaper
Reaper's picture

The lawyer and attorney general leeches feed so voraciously, that nothing is left for the BOA's victims.

Wed, 07/16/2014 - 13:19 | 4963269 waterhorse
waterhorse's picture

That's not a bug.  It's an intentional feature of the whole control fraud design.

Wed, 07/16/2014 - 10:31 | 4962532 LawsofPhysics
LawsofPhysics's picture

Do they still have 70+ trillion of CDS derivatives in a "FDIC-insured" account?

roll the motherfucking guillotines...

Wed, 07/16/2014 - 10:53 | 4962610 ekm1
ekm1's picture

Agree. This is all idiotic nonsense.

 

All primary dealers are insolvent and exist because the government back up their swap gambling.

Wed, 07/16/2014 - 10:59 | 4962625 Ban KKiller
Ban KKiller's picture

Shusssss....just look away!

Wed, 07/16/2014 - 11:02 | 4962637 El Vaquero
El Vaquero's picture

I thought it was only 35 trillion, most of them were interest rate derivatives and they were merely held in an FDIC insured deposit taking subsidiary.  But none of those picked nits negate your conclusion about rolling motherfucking guillotines. 

 

(Scroll down to page 26:  http://www.occ.gov/topics/capital-markets/financial-markets/trading/deri...)

Wed, 07/16/2014 - 10:33 | 4962538 mayhem_korner
mayhem_korner's picture

 

 

If we call the settlement payouts "dividends", does that help the narrative?

Wed, 07/16/2014 - 10:37 | 4962549 Postal
Postal's picture

Of course they're "one-time" and "non-recurring." Just like quarterly estimates.

Wed, 07/16/2014 - 10:57 | 4962621 Ban KKiller
Ban KKiller's picture

Proud to say I am a small part of their litigation costs. And a hearty "Fuck you very much" to skunk of America for being so greedy thereby short cutting their chain of ownership regarding notes and mortgages. 

What idiot owns their stock? Buffett does not count as he black mailed them!

Wed, 07/16/2014 - 13:24 | 4963297 waterhorse
waterhorse's picture

Me too.  With the same control-fraudster.  I don't know what idiot would own their stock - Dick Bove?  What I want to know is who banks with these predators and why?

Wed, 07/16/2014 - 11:18 | 4962684 slightlyskeptical
slightlyskeptical's picture

The real reason is that the litigation is all about past business actions and not current business actions. As such, to get a sense of their current operations you need to back it out.

Wed, 07/16/2014 - 12:27 | 4962961 Cthonic
Cthonic's picture

Once a party is known to be susceptible to blackmail, blackmailers tend to keep coming back for seconds.

Wed, 07/16/2014 - 13:25 | 4963302 waterhorse
waterhorse's picture

Meh.  If they didn't perform their due diligence, that's THEIR problem and they should take the heat for it.

Wed, 07/16/2014 - 11:42 | 4962746 syntaxterror
syntaxterror's picture

Does anyone have a plot of hooker and blow consumption right after these bribes are paid?

Wed, 07/16/2014 - 11:50 | 4962783 Imminent Collapse
Imminent Collapse's picture

I assume that any fine BOA pays will be magically, fully deductible?

Wed, 07/16/2014 - 13:26 | 4963309 waterhorse
waterhorse's picture

but of course!  And the "fines" will somehow make it back to the banksters - full circle.

Wed, 07/16/2014 - 12:21 | 4962923 Recognizer
Recognizer's picture

"Going to press" what?  Press the Enter key?  

 

 

Wed, 07/16/2014 - 13:52 | 4963458 hooligan2009
hooligan2009's picture

BofA fine goes to Treasury, Treasury deficit reduced but not by enough. BofA profit is reduced, doesn't pay tax for the next ten years. 

Treasury borrows money to fund much bigger deficit (of $500bn to $1 tn) every year, Treasury goes to Fed for cash to fund deficits via QE. Fed lends $50 billion to BofA at 0% to buy treasury securities at 2%, profit to BofA, $1 bn a year against tax credit for losses of $33 billion from litigation. 

Rinse, repeat, continue for 33 years.

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