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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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Mon, 08/08/2011 - 08:18 | 1536407 Badabing
Badabing's picture

This is big!

Mon, 08/08/2011 - 08:27 | 1536418 spiral_eyes
Mon, 08/08/2011 - 09:13 | 1536529 caerus
caerus's picture

obligatory new order link new order - blue monday

Mon, 08/08/2011 - 08:31 | 1536434 Popo
Popo's picture

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

 

Mon, 08/08/2011 - 10:48 | 1537077 fx
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!

Mon, 08/08/2011 - 11:52 | 1537454 H. Perowne
H. Perowne's picture

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

Mon, 08/08/2011 - 08:26 | 1536409 falak pema
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. 

Mon, 08/08/2011 - 08:24 | 1536416 Seymour Butt
Seymour Butt's picture

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

Mon, 08/08/2011 - 08:25 | 1536419 buzzsaw99
buzzsaw99's picture

Bennie will buy them!

Mon, 08/08/2011 - 09:09 | 1536519 spiral_eyes
spiral_eyes's picture

benny will buy everything for dollars on the penny.

Mon, 08/08/2011 - 08:25 | 1536421 topcallingtroll
topcallingtroll's picture

That is great news!

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

Mon, 08/08/2011 - 08:48 | 1536469 Miss Expectations
Miss Expectations's picture

Too Big to Fail Fail.

Mon, 08/08/2011 - 08:26 | 1536423 orangedrinkandchips
orangedrinkandchips's picture

BAC blows as do all the fucking jack-leggs running the bank. It's the anti-capitalistic monopoly...BUT...to 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...

Mon, 08/08/2011 - 08:27 | 1536426 Irish66
Irish66's picture

aig to sue

Mon, 08/08/2011 - 08:31 | 1536427 AUD
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.

Mon, 08/08/2011 - 08:28 | 1536430 cossack55
cossack55's picture

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

Mon, 08/08/2011 - 08:33 | 1536442 PulauHantu29
PulauHantu29's picture

Will Kenny still get his $80 Million Bonus?

Mon, 08/08/2011 - 08:34 | 1536444 dellbalboa
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.

Mon, 08/08/2011 - 08:35 | 1536446 thunderchief
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. 

Mon, 08/08/2011 - 08:42 | 1536454 Version 7
Version 7's picture

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

Mon, 08/08/2011 - 09:03 | 1536502 LawsofPhysics
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.

Mon, 08/08/2011 - 08:37 | 1536448 DormRoom
DormRoom's picture

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

Mon, 08/08/2011 - 08:44 | 1536462 dellbalboa
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"  :)))))))))

Mon, 08/08/2011 - 08:40 | 1536452 apberusdisvet
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?

Mon, 08/08/2011 - 08:59 | 1536491 Miss Expectations
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."

http://www.thechathamnews.com/

 

Mon, 08/08/2011 - 09:06 | 1536513 LawsofPhysics
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.

Mon, 08/08/2011 - 09:17 | 1536544 Abitdodgie
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 

Mon, 08/08/2011 - 08:42 | 1536455 Transitory Disi...
Transitory Disinflation's picture

And so it begins....

Mon, 08/08/2011 - 08:42 | 1536456 Total Collapse
Total Collapse's picture

What happens to BAC puts is BAC split up?

Mon, 08/08/2011 - 08:42 | 1536457 Seasmoke
Seasmoke's picture

I Want to see BOA flatlined ______________________________________

Mon, 08/08/2011 - 08:42 | 1536458 kloot
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.

Mon, 08/08/2011 - 08:49 | 1536468 doomandbloom
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?

Mon, 08/08/2011 - 08:50 | 1536471 weltvermesser
weltvermesser's picture

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

Mon, 08/08/2011 - 08:51 | 1536473 vast-dom
Mon, 08/08/2011 - 08:51 | 1536474 Biggvs
Biggvs's picture

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

http://www.bloomberg.com/video/73631944/

Mon, 08/08/2011 - 08:54 | 1536478 rsnoble
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?

Mon, 08/08/2011 - 08:58 | 1536483 monopoly
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.

Mon, 08/08/2011 - 08:56 | 1536484 Dr. Engali
Dr. Engali's picture

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

Mon, 08/08/2011 - 09:00 | 1536493 pelican
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.

Mon, 08/08/2011 - 09:02 | 1536500 falak pema
falak pema's picture

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

Mon, 08/08/2011 - 09:37 | 1536665 j0nx
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.

Mon, 08/08/2011 - 08:56 | 1536485 Yohimbo
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...

Mon, 08/08/2011 - 09:00 | 1536495 ZeroPower
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.

Mon, 08/08/2011 - 09:01 | 1536498 BlackholeDivestment
BlackholeDivestment's picture

I can't believe people still have money in that stinking pile of shit, but they still do. http://www.youtube.com/watch?v=qKgYCgjP_K4

 

Mon, 08/08/2011 - 09:02 | 1536501 monopoly
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. :)

Mon, 08/08/2011 - 09:11 | 1536505 Widowmaker
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!!!

Mon, 08/08/2011 - 09:08 | 1536518 sunnydays
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.

Mon, 08/08/2011 - 09:17 | 1536549 onarga74
onarga74's picture

What is their FICO score?

Mon, 08/08/2011 - 09:21 | 1536572 curbyourrisk
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.

Mon, 08/08/2011 - 09:24 | 1536585 NoControl
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

Mon, 08/08/2011 - 09:29 | 1536612 silvertrain
silvertrain's picture

The Democratic National Convention will be held in Charlotte,Nc next year which is the home of BOA,which is also one of the sponsors of the event, in the BOA center..
They may be to left wing to fail...

Mon, 08/08/2011 - 09:56 | 1536767 Doyle Hargraves
Doyle Hargraves's picture

BWAHAHAHA....insurance policy for TPTB taken out in 2008 about to pay off in a big way, cue the riots, drama, Ben and Timmay in front of Congress telling them how much to write the check for. BAC trading at $7 and sinking fast, no new equity offering at that price, once again JP Morgue/GS will get their piece of the pie and we will pay for the funeral and burial of cunt tree wide, et al.. Business as usual Bitchez!

Mon, 08/08/2011 - 10:53 | 1537125 glenlloyd
glenlloyd's picture

So Countrywide will be spun off under the 'bad bank' model?

Mon, 08/08/2011 - 11:10 | 1537231 Doyle Hargraves
Doyle Hargraves's picture

Yeah if you consider 'TARP 2' a bad bank.

Mon, 08/08/2011 - 11:25 | 1537303 Zeppelin5637
Zeppelin5637's picture

A frequently used BOA term for unhappy costomers was "broken glass"....not worth further consideration and something for others to clean up.  Let us relish in the broken glass that was BOA- what a bunch of douch bags!

Wed, 09/14/2011 - 05:15 | 1667546 chinawholesaler
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