Bank Of America Finds It Did Some More Crime In Q3, Revises Previously Released Earnings Lower By $400 Million

Tyler Durden's picture

A week ago it was Citi, which took farcical non-GAAP earnings through the rabbit hole when it revised its already reported Q3 earnings lower by $0.20 to, as described in "Algos Please Ignore: Citi Slashes Previously Reported Net Income Due To "Legal Investigations" Over FX Rigging Probe" and now it is that other bank which has made crime an ordinary course of business.

From the just released press release which sees its Q3 EPS revised down from $0.04 to -$0.04

Bank of America Corporation today announced an adjustment to its financial results for the third quarter ended September 30, 2014 to include additional litigation expense related to its foreign exchange business.


Subsequent to the company’s earnings announcement on October 15, and prior to the filing of the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, the company has been engaged in separate advanced discussions with certain U.S. banking regulatory agencies to resolve matters related to its foreign exchange business. As a result of those discussions, the company recorded a $400 million non-deductible charge and adjusted its third-quarter 2014 financial results to a net loss of $232 million or $(0.04) per share. There can be no assurance as to the ultimate outcome of these matters.


The company’s Quarterly Report on Form 10-Q, which is being filed today with the U.S. Securities and Exchange Commission, will reflect the adjustment.

Is this a surprise? No. Recall: "For Bank Of America, Crime Is Now An Ordinary Course Of Business"

Once upon a time banks made money in one of two ways: either by borrowing short and lending long, a/k/a the conventional banking way, or through investment banking, which includes advisory, underwriting and trading with the backstop of billions in deposits, aka the proto-hedge fund way.


Then things changed.


For a profoundly philosophical, if comically metaphysical essay, that uses several thousand excess words and footnotes to come to the miraculous conclusion that bank accounting is, get this, fickle, the following Bloomberg take should be an amusing way to kill a few extra hours. Philosophical ramblings aside, it is, of course, very easy to determine if a bank made or lost money, and that does not even involve looking at the cash flow statement. One looks at the Non-GAAP bottom line and excludes the "excluded", or added back items.


As a reminder, the reason non-GAAP exists in the first place, is to goalseek an already meaningless number to just a cent or two above Wall Street consensus, so as to kickstart the buying of the stock by headline scanning algos. Because EPS may be meaningless but stock-tied compensation/incentive awards are quite meaningful, and lucrative, to executives.


Still, even when it comes to the wizardry of non-GAAP, for a number to be somewhat credible, it has to follow a few basic guidelines, namely that in order for an expense or charge to be "excluded" from the bottom line, it has to fall within the "one-time", "non-recurring" category. Add it back too many times and the magic falls apart as even the mutually-accepted fabulation by circle-jerking ostriches that is non-GAAP. promptly evaporates.


Which is why we ask: why do Wall Street "analysts" continue to add back Bank of America's legal and litigation charges and settlements from its bottom line when calculating its non-GAAP EPS?


As the chart below clearly show, any myth that Bank of America's legal fees are "one-time" or "non-recurring" is by now long dead and buried. In fact, in 2014 they have never been greater!



How does this nearly $30 billion in legal "addbacks" over the past three years compared to the so-called Net Income Bank of America generated over the same time period? Here is the answer:



In short: between Q4 2011 and Q3 2014 Bank of America produced "Net Income" of $15.9 billion. However, the amount of added back "one-time, non-recurring" legal expenses is a stunning $28.9 billion: two of every three dollars, non-GAAP as they may be, comes from Bank of America engaging in criminal activity... and that's just the stuff it got caught for.


So perhaps an even more relevant question than how long will the EPS "addback" bullshit continue, is how long will the regulators and enforcers allow Bank of America to exist as an organization for which two-thirds of its "ordinary course business" is, for lack of a better word, crime?

And now we can add another $400 million of evil bank misdeeds because there was no actual carbon-based person behind these crimes. And as everyone knows by now, actually goes to jail for financial crime upon crime upon crime. Which also means that BofA has spent some $29.4 billion in just the past three years, to keep its 229,500 employees, but most the executives, out of prison: an insane amount of $128,104.57 per person.

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Rainman's picture

Call me delusional, but this looks like a good old fashioned skim going on between the banksters and .gov ... nothing more or less.

ACP's picture


And this money doesn't to go any victims or taxpayers, but Eric Holder's favorite leftist hate groups:

Bananamerican's picture

don't worry...the Republicans will put a stop to all this.... (droll)

economics9698's picture

Total fines since 2008 = $251 billion.  Fed balance sheet $4.3 trillion.  17 to 1 payoff since TARP.  Fucking criminals.

economics9698's picture

Call these mother fuckers what they are, organized crime.  Both Washington and Wall Street.

capltd's picture

Judicial Watch is just another hack group trying to enforce the liberal vs conservative divide by telling people what they want to hear.  Divide and conquer - consider yourself conquered.  

Dinero D. Profit's picture


The money goes to silk stocking law firms whose partners charge $500 per hour, and a horde of law associates are billed at $350 an hour, all direct expenses, plus a percentage of overhead expenses. The bills submited by law firms to these banksare comically tragic in length.



TeamDepends's picture

Boy, those BofA attorneys are good.

LawsofPhysics's picture

....and yet still remains in business...

Get long black markets and sharecropping, beat the rush.

Evil Bugeyes's picture

Don't do the crime if you can't pay the fine.

LawsofPhysics's picture

Please, it's simply the "cost of doing business today".

"Full faith and credit"  -  a pardigm shift is upon us, plenty of opportunities...

ebworthen's picture

Don't do the crime if you can't bribe the judge.

blindman's picture

humor thors day.
Supreme Court of Comedy - featuring NJweedman
from Edward Forchion 4 years ago
but that lindseed, graham cracker, war nazi
claiming the vote on tuesday means more
americans want more war and he wants to give
it to em',(the voice of the people and the political
mandate bullshit) that is just the kind of stupidity
that has, and will continue, to make the republican
party the nest of the unspeakable and eternally
cursed; may they carry on to their well deserved
doom. a special place in hell awaits these type
of sleazy blood money bought politicians.

Bell's 2 hearted's picture

The Gap reported october sales today

 same store sales (year over year)


(october 2013 ... +4.0%)


expected ... -1.9%

actual ... -3.0%

limacon's picture

It's inherent in the adversarial , trial-by-combat sytem .

Much better alternatives are available , but even the knowledge of these are kept away from the masses .

The advantage to the vested interests are too big to give up easily .


ebworthen's picture

Guido gives the beat cop $400 cash to look the other way so he can keep shaking down shop owners for $40K/month.

Bell's 2 hearted's picture

no indictments

no prosecutions 


just haggling over the settlement


Amerika at its finest

Colonel Klink's picture

Bank robbery of America!

Bell's 2 hearted's picture



Bank of America executives found to have had group sex with children they had murdered ... stay tuned to find out how much they were FINED ...

redux2redux's picture

Countrywide the gift that keeps on giving!

Doubleguns's picture

I am sure they passed the stress test with those fake numbers and their bonus was based upon the fake numbers too. Just think about how this all played out to the executives benefit.  

toros's picture

from link above

" the aim of banking is to conceal risk: The process of taking all of a bank's contracts, ignoring most of them, estimating the change in value of the rest, summing the estimates and producing a single (preferably positive!) number that you call a bank's "earnings" is sort of a soothing process. It might even persuade a casual observer not to look too closely at the roiling uncertainty that underpins that number. Because banks are magic, and if you look too hard at how the magic happens, you might stop believing in it."

mastersnark's picture

Unless you are an attorney, I really don't think you can understand how big a number $28.9 billion in less than 3 years of legal fees really is. The hours behind a number that large is mind boggling, even at the hourly rate they must be charging.  

americanspirit's picture

So where oh where is the BOA shareholders' class action lawsuit?

deeply indebted's picture

I'm confused. Perhaps someone can help - If BoA is Too Big To Fail, and we know it is, then why the fuck do they spend even one dime on "defense"?

capltd's picture

What  is the RICO Act?

max2205's picture

It when the cops pull you over and take your cash then laugh at you as you drive away

yogibear's picture

It's ok since Eric Holder announced the Too Big To Fail was Too Big to prosecute. 

All crimes, even murder pursued by the TBTF is allowed by the Just-Us department.

Choomwagon Roof Hits's picture

I wonder what would happen to me if I "discovered" I committed crimes in 3Q and disclosed it to the public? 

Nevermind, answered my own question.  Federal pound me in the ass prison.

bhakta's picture

The banksters must be stopped.

SillySalesmanQuestion's picture

It must be laundering all of that drug money that is keeping it afloat, because, that is one fugly chart of net income/legal expense.

If any of us were to run a busineess like that chart, we would be O.O.B and in jail...

Kill the bankers!

Dinero D. Profit's picture


It is impossible to audit a Fortune 500 corporation.  

The IRS/SEC knows this, and they have never, never performed a full audit on any on them.

Accounting systems are too complex.


I could say more, I don't want to go into details.


(Did you know that more than a few F500 corporations hold intricately designed black hole accounts for the CIA?)

yerkiddinrite's picture

Kudos to all who took the time to read this article and respond. Bravo that you understand the bankers ain't shit.

But killing them won't do any good.The only answere is to take your money out of the banks.All and every one.Every dollar.

Only then will we take this country back.But hey,maybe pigs will fly.

americanspirit's picture

Only 35 comments here - has everybody given up and decided that its pointless to try to stop these criminals? Are we all good Germans?