Bank of America Defaults Risk Soars To Highest Since June 2009, Jumps By 10% Overnight

Tyler Durden's picture

Last week, when discussing the ongoing collapse in the house of cards that Ken Lewis built and which Brian Moynihan is helping bring down, we asked readers if they "Got Bank Of America CDS?" both in general, and in the aftermath of the disclosure that "New York AG Says BAC's $8.5 Billion Settlement Is "Unfair and Misleading"." We hope the answer was yes for most, as BAC CDS just jumped to the highest since June 2009, hitting 235 bps after exploding by almost 10% overnight. And with the stock now trading with a $7 handle, we are very much concerned TARP 2 is coming soon, only this time BAC will be formally split up, for no other reason than to spin Countrywide off and most  likely see it end up with Fed funding. Wherein lies the rub: what will end up happening when BAC loses its TBTF status is that CDS referencing CFC will grind tighter to a spread pari with the US, while those referencing BAC (and/or MER) will initially tighten only to surge on the realization that BAC will have lost its government backstopped status (courtesy of the "conservatorship" of its most atrocious division).

And in other news, Goldmnan CDS was wider 17 to 183, Wells 10+ to 120 and MS 22.9 to 221.6. Risk is finally coming home to roost.

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Popo's picture

Particularly big because BAC isn't one of the inner-circle.  They're outsiders -- much like Lehman.


fx's picture

ZH is getting a bit ahead of itself in its gloom-and-doom jubilation. BAC, AIG etc. will be just fine and no, there will be no new TARP for the simple reason that it is not needed. Sorry to spoil the uber-bears' party here but what you are suggesting in your superficial article is just guesswork and lacks any facts. And no, the cds could jump another 500% from here and still it would not make your doomsay any truer. And yes, BTFD!! This one is the real one to buy!

H. Perowne's picture

Jim, please. Coke this early in the morning? Shouldn't you seek help?

falak pema's picture

That makes it three big ones : Socgen, Unicredit and BofA. The bankster buzz is getting really domino weird or skewered.

Will we have served to us those same oligarchic US banks in coming months, like spread eagled banksters, including the Squid, skewered like souvlaki meat roasted rosy brown to bankrutpcy? A la december 2008 crash, but with no back up possible by another government bailout this time!

That would be poetic justice to those same shills who took the poor Greeks to town in auld greek style!

But I very much doubt it; they are the TBTF types who run the world. They don't fall easy. 

Seymour Butt's picture

That couldn't have happened to a "nicer" bank. 

buzzsaw99's picture

Bennie will buy them!

spiral_eyes's picture

benny will buy everything for dollars on the penny.

topcallingtroll's picture

That is great news!

It is about time something was done about "too big to fail."

orangedrinkandchips's picture

BAC blows as do all the fucking jack-leggs running the bank. It's the anti-capitalistic give them a shred of credit....BAC had a shot-gun wedding with Cunt-rywide and had to mop up all that bullshit while Angelo goes free....dump them with pure shit and expect them to do well....


not fair but ironic...they had to them what they do to us...they shit on us, Cuntrywide shat on them...


fuck em all is all I can think of...

AUD's picture

And central banks are no doubt rolling out their railway guns ready to rain inflation upon the earth. It will blow the stockmarket sky high.

cossack55's picture

I live only for the complete and total destruction (think Carthage) of JP Morgue.  BAC is a side show.

PulauHantu29's picture

Will Kenny still get his $80 Million Bonus?

dellbalboa's picture

Oh i cant wait for the demise of BAC! its been too long damn it!




I will literally go mad if there is such monstrousity on the horizon as TARP 2.

thunderchief's picture

The typical BAC account holder (like myself) has a couple thousand dollars in their account at most.  Who would be dumb enough to give them anymore. 

Version 7's picture

The typical account holder doesn't have savings. You have a lot of money.

LawsofPhysics's picture

If it is paper, he has no money.  I would never keep real money in a bank way too easy to confiscate.

DormRoom's picture

hide  yo wife. hide yo kids.  They be defaulting all up in here.

dellbalboa's picture

You should have said, "Hide your kids, hide your wife and hide your husband too because they be defaulting everybody out here"  :)))))))))

apberusdisvet's picture

Can we short Charlotte?  BAC, located  in NC, has never been an insider on Wall Street; I've always felt that they would be thrown under the bus; the good part will go to the Morgue; the bad part to the American taxpayer; what else is new?

Miss Expectations's picture

There may not be a chicken in every pot this go-round.  Check out this front page from the Chatham News (North Carolina):

"These folks are facing a very difficult situation,"  he said, "because they have the risk of losing their homes and their farms if something is not done.  A lot of these farms have been in their families for generations."


LawsofPhysics's picture

The red sheild is going to get that land in the south, one way or another.  That was what the civil war was really about folks, the rothchild's never wanted to end slavery, they just wanted to change the face of slavery and make it an equal opportunity employer.  Now that is affirmative action for you.

Abitdodgie's picture

The farmers let themselves become baby sitters (bitchez) to Townsend so what did they expect , maybe they should try real farming where they take responsability for themselves 

Total Collapse's picture

What happens to BAC puts is BAC split up?

Seasmoke's picture

I Want to see BOA flatlined ______________________________________

kloot's picture

probably a dumb question: is there a 10% rule for BAC, meaning if it falls 10 percent it gets haulted?

wondering if i should take profits on my puts on open.

doomandbloom's picture

Buffet in Denial-"It did not happen, cannot happen, has not happened"

could someone next time break downgrade news to that old guy a bit more gently pls?

weltvermesser's picture

Bloomberg now in complete denial mode, next up: free madoff...

Biggvs's picture

Just saw this - Nice interview with Jim Rogers on the US ratings downgrade, gold, silver, money printing, etc...

rsnoble's picture

I wonder how Doug Kass's  "boatlad of BAC@$8.30" trade is working out?  Oh well, his IWR short will cancel it out unless he went long on that too.

I have a few SDS calls this am, I was kinda pissed I didn't get out of them friday but can't say im too upset at the moment lol.  Might make beer $ for the month!

Oh.......fuck more tarp.  If these fuckers are really $500trillion in the hole with bad debt derivatives then why even bother????????????????????

Let's see..........GS stock price is the furthest from zero out of all the banks.  I wonder who's the last one standing?

monopoly's picture

GM, what I do not understand is why you would have 1 dollar in any of these broken banks. I realize the convenience, but there has to be a small solvent bank or credit union that you can utilize. Why give a bank that helped destroy this economy your precious dollars. To me that is being lazy. Most business is done online, ATMs, you do not even need a physical presence of a bank most of the time. We had accounts at BAC, US Bank and Wells, all gone two years ago. A very nice feeling.

It especially bothers me that if you are on zero hedge, which is an intelligent decision, how can you have an account with BAC C MS, US bank, etc. I just do not get that. No disrespect but all you are doing is breathing life into a dying squid with parasites.

Dr. Engali's picture

Next domino to fall is Well's Fargo/Wachovia that piece of shit bank.

pelican's picture

Wells Fargo is now every place. I have seen small towns with three WF branches because of TBTF growth.

Personally, I hope they fail hard.

falak pema's picture

Berkshire/W Buffet loves them. That means they're covered.

j0nx's picture

Hopefully they do so I can stop paying on this underwater mortgage for a roach infested home in an illegal alien and section 8 infested neighborhood. Bring it on bitches! Either shit or get off the pot because I've been waiting for 3 years to stop paying on this bitch.

Yohimbo's picture

Anything with "America" in the title wont be allowed to survive. NWO thugs cringe at the word like the witch of the west to water...

ZeroPower's picture

Tyler, their CDS curve is actually inverted (well, make what you will of 2 points on the curve..)

5yr 230/240 and 10yr at 224/232.

BlackholeDivestment's picture

I can't believe people still have money in that stinking pile of shit, but they still do.


monopoly's picture

A perfect example of what we have discussed here for months with no volume, HFT ruling and confetti money. Look at WLT, now that is a fairly solid company. Well just completed a round trip, now down 50% to the level of a year ago. BTFD, Not for me. I will add we are way overdue for a bounce. I am just going to watch. Better odds here in Nevada and the girls are attractive. Too bad many of the are college graduates, some with Masters degree. What a f____d up country.

But will add a little to miners. :)

Widowmaker's picture

Where is the fat cat of fraud, Ken Lewis?

Not paying the price for his greed ripping off the young and old that's where. That fucking locust still has a record debt to pay decent society.

The sooner he meets demise the better, I wish nothing but pain and exposure for the Lewis family and their ill gains.

Rot in hell, Ken, and in the meantime i hope you live every remaining day paralyzed with fear of the common man.

Watch your lying cheating anti-american back, you son of a bitch!!!

sunnydays's picture

Citibank has just reaffirmed it's BUY call for BAC - per CNBC.

Guess they are trying to help all they can for their Wall street partners in crime.

onarga74's picture

What is their FICO score?

curbyourrisk's picture

Jamie Dimon licking his chops at the potential to buy Bank of America....getting Merrill Lynch to boot would be the cherry on the cake.


Jamie Dimon.......the leader of the 3rd National Bank of Ameirca and future Treasury Secretary.

NoControl's picture
Bank of America Defaults

Typo or a little misinformation to trip up the crawler algos?


too bad they're too busy scanning their own subpoenas