Bank Of America Has Lost Money Trading On Only Three Days In 2012

Tyler Durden's picture

From the just released Bank of America 10-Q: "During the three months ended June 30, 2012, positive trading-related revenue was recorded for 95 percent, or 60 of the 63 trading days of which 75 percent (47 days) were daily trading gains of over $25 million and the largest loss was $11 million. These results can be compared to the three months ended March 31, 2012, where positive trading-related revenue was recorded for 100 percent (62 days) of the trading days of which 95 percent (59 days) were daily trading gains of over $25 million. There were no daily trading losses recorded during the three months ended March 31, 2012." This vaguely reminds us of the JPM's trading performance. Just before they got busted for hiding a $350 billion hedge fund in the firm's "risk hedging" aka CIO/Treasury division that is. Also, if anyone else has problems believing that BofA's trading desk, with or without Merrill, both of which are better known as the C-grade (and that is being generous) of Wall Street traders, could generate profits on 122 of 125 trading days, please lift your hand.

Also, for those who are far more interested by the firm's imminent plethora of putback settlements, in the aftermath of the July 17 Syncora agreement, among which with MBIA, here is what the Bank has to say about that:

Recent Syncora Settlement


On July 17, 2012, we, including certain of our affiliates, entered into an agreement with Syncora Guarantee Inc. and Syncora Holdings, Ltd. (Syncora) to resolve all of the monoline insurer's outstanding and potential claims related to alleged representations and warranties breaches involving eight first- and six second-lien RMBS trusts where Syncora provided financial guarantee insurance. The agreement, among other things, also resolves historical loan servicing issues and other potential liabilities to Syncora with respect to these trusts. The agreement covers the five second-lien RMBS trusts that were the subject of litigation and nine other first- and second-lien RMBS trusts, which had an original principal balance of first-lien mortgages of approximately $9.6 billion and second-lien mortgages of approximately $7.7 billion. As of June 30, 2012, $3.0 billion of loans in these first-lien trusts and $1.4 billion of loans in these second-lien trusts have defaulted or are 180 days or more past due (severely delinquent). The agreement provided for a cash payment of $375 million to Syncora. In addition, the parties entered into securities transfers and purchase transactions in connection with the settlement in order to terminate certain other relationships among the parties. The total cost to the Corporation was approximately $400 million and was fully accrued for by the Corporation at June 30, 2012.


Unresolved Repurchase Claims


At June 30, 2012, the total notional amount of our unresolved representations and warranties repurchase claims was approximately $22.7 billion compared to $12.6 billion at December 31, 2011. These repurchase claims do not include any repurchase claims related to the Covered Trusts. Unresolved repurchase claims represent the notional amount of repurchase claims made by counterparties, typically the outstanding principal balance or the unpaid principal balance at the time of default. For a table of unresolved repurchase claims, see Note 8 – Representations and Warranties Obligations and Corporate Guarantees to the Consolidated Financial Statements. In the case of first-lien mortgages, the claim amount is often significantly greater than the expected loss amount due to the benefit of collateral and, in some cases, mortgage insurance or mortgage guarantee payments. Claims received from a counterparty remain as outstanding until the underlying loan is repurchased, the claim is rescinded by the counterparty, or the claim is otherwise resolved. When a claim is denied and we do not receive a response from the counterparty, the claim remains in the unresolved claims balance until resolution. We expect unresolved repurchase claims to continue to increase due to, among other things, our differences with Fannie Mae (FNMA) regarding our interpretation of the governing contracts ongoing litigation with monoline insurers, and a continuing submission of claims by private-label securitization trustees in combination with the lack of an established process to resolve disputes with private-label securitization trustees. For more information see Estimated Range of Possible Loss – Government-sponsored Enterprises on page 60.


The notional amount of unresolved GSE repurchase claims totaled $11.0 billion at June 30, 2012. We continued to experience elevated levels of new claims from FNMA, including claims related to loans on which borrowers have made a significant number of payments (e.g., at least 25 payments) and, to a lesser extent, loans which defaulted more than 18 months prior to the repurchase request. Unresolved claims from FNMA totaled $10.1 billion at June 30, 2012, including $7.3 billion of claims related to loans on which the borrower has made at least 25 payments. During the six months ended June 30, 2012, we received $6.3 billion of claims from FNMA, including $5.5 billion of claims related to loans originated between 2005 and 2007. This amount includes $4.4 billion of loans on which the borrower had made at least 25 payments, including $2.1 billion of loans on which the borrower had made at least 37 payments. Historically, for those claims that have been approved for repurchase from the GSEs, our loss severity rate on loans originated between 2004 and 2008 has averaged approximately 55 percent of the claim amount, which may or may not be predictive of future loss severity rates. We continue to believe that our interpretation of the governing contracts is consistent with past practices between the parties and our contractual obligations. For further discussion of our experience with the GSEs, see Government-sponsored Enterprises Experience on page 61.


The notional amount of unresolved monoline repurchase claims totaled $3.1 billion at June 30, 2012. We have had limited repurchase claims experience with monoline insurers due to ongoing litigation and have not received a significant amount of new repurchase claims from the monolines in recent periods. We have reviewed and declined to repurchase substantially all of the unresolved claims at June 30, 2012 based on an assessment of whether a breach exists that materially and adversely affected the insurer's interest in the mortgage loan. Further, in our experience, the monolines have been generally unwilling to withdraw repurchase claims, regardless of whether and what evidence was offered to refute a claim. Substantially all of the unresolved monoline claims pertain to second-lien loans and, except those that have been resolved in the Syncora Settlement, are currently the subject of litigation. In addition, $674 million of monoline claims outstanding at June 30, 2012 were resolved through the Syncora Settlement on July 17, 2012. For further discussion of our experience with the monoline insurers, see Monoline Insurers on page 63.


The notional amount of unresolved claims from private-label securitization trustees, whole-loan investors and others increased to $8.6 billion at June 30, 2012 compared to $3.3 billion at December 31, 2011. The increase is primarily due to increases in submission of claims by private-label securitization trustees. We anticipated an increase in aggregate non-GSE claims at the time of the BNY Mellon Settlement a year ago, and such increase in aggregate non-GSE claims was taken into consideration in developing the increase in our reserves at that time. We do expect unresolved repurchase claims from private-label securitization trustees to increase as claims continue to be submitted by private-label securitization trustees and there is not an established process for the ultimate resolution of claims on which there is a disagreement. At least 25 payments have been made on approximately 63 percent of the defaulted and severely delinquent loans sold to non-GSE securitizations or as whole loans between 2004 and 2008. For further discussion of our experience with whole loans and private-label securitizations, see Whole Loans and Private-label Securitizations on page 64.


During the three months ended June 30, 2012, the Corporation received $8.2 billion in new repurchase claims, including $4.4 billion submitted by the GSEs for both legacy Countrywide originations not covered by the GSE Agreements and legacy Bank of America originations, $3.7 billion submitted by private-label securitization trustees and $119 million submitted by whole-loan investors. During the three months ended June 30, 2012, $1.6 billion in claims were resolved, primarily with the GSEs. Of the claims resolved, $876 million were resolved through rescissions and $704 million were resolved through mortgage repurchases and make-whole payments.

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wcvarones's picture

All they had to do was get rid of that retarded country bumpkin Ken Lewis.  Worst. Trade. Ever.

Pladizow's picture

And their share price tells a different tale?

LongBalls's picture

If this is not enough to tell you that the game is rigged then it's hopeless. All traders know that a win/loss ratio such as that is impossible unless your in on setting the market.

bdc63's picture

nothing to see here ... just another run of the mill 6 sigma event ...

nope-1004's picture

BAC goes tits up without rigged trading.  Profits need to come from somewhere, as all other departments throughout are losing hand over fist.  Signals to me that we're closer to the end for this insolvent dinosaur.


Bicycle Repairman's picture

I'll speculate that rigged trading is a core strategy in re-capitalizing the TBTF banks.

analyzer_66's picture

i would love to see a whistleblower from the bank come forward and say exactly that but said whistleblower would have a massive heart attack or committ suicide before being deposed

jeff montanye's picture

i'm going with a drive by, a fly by, a drone by.  

seriously folks.  no administration until the hopey changey has warred like this on those who tell the truth:

Freddie's picture

Yup. That piece of sh*t warner buffer never loses money. He makes taxpayers cover his losses.   Someone should throw a hairdryer into his bath.  

AldousHuxley's picture

they know they are holding bags of shit, so they probably short their own stock.

The Big Ching-aso's picture



Wow.   Somebody really phucked-up over there during those 3 days.

Doomer's picture

Gotta let the muppets win once in a while.

jeff montanye's picture

no.   they.   don't.


got to take your own chances.  


AldousHuxley's picture

BAC back down to 2008 lows


wouldn't worry so much about this sinking turd....just let it flush.


also if you win $1 every day and once  a month you lose $1000, then in the long term  you are fucked.

also if you had to be bailed out and saved by buffett, billions in marketing got wasted.

also if you are a bank not in manhattan as part of NY FEd but in north carolina, then you are fucked.

also when Fannie and Freddie (aka government) are coming after you for owning 58% of the GSEs’ total mortgage repurchases, you are fucked.



Earlier this week the regulator in charge of Fannie and Freddie rejected a proposal from U.S. Treasury to reduce mortgages for underwater homeowners




LMAOLORI's picture


Bailed out by buffet actually taxpayers bailed out buffet too!


Buffett’s Betrayal


AldousHuxley's picture

of course


US bailout plan has been:

cut dividends --> bank stress test PR --> Private debt raising ---> buffet public PR bailout --> Fed money printing --> Uncle Sam buys it out with Treasury (your taxes)

jeff montanye's picture

wait a minute, aldous.  

where is the part about raising dividends (and bonuses)?

i hope the kids watching have a clue as to who you and your moniker are.  also the late great eric blair

and just so i don't seem to be a one trick pony, archibald leach:

wish anyone else was as cool.  esp, vs. audrey in charade (unless seeing lee marvin strangled and attached to a radiator is "too much").

p.s. i'm not saying my celebrities beat their celebrities but audrey hepburn fought the nazis before she hit puberty.  what anyone else got?  and holly golightly to boot?


CrawdadMan's picture

Isn't that statement kinda paradoxical.

GAAPpreNixon's picture

I have to agree that crimnality is part and parcel of the "inequities" market or trading "insecurities". The only way you can call this a "stock" market is if the REAL "stock" is the "meat on the hoof" doing the buying and the "market" is a slaughterhouse.

But that isn't the main problem. YOU are the MAIN problem if you envy the criminals running the show.

Morris Berman addresses the root of the problem: The cancerous Growth Paradigm. 

Americans anxiously watch the other tiny "fish" in the school being herded by a group of killer whales to see which way to turn en masse to. 



Rather than questioning the con artists, mountebanks and carnival barkers herding us into the fleece area or the slaughter house,  Americans dream of being a rich con artist themselves. I write to try to wake them up. The rich are a symptom. The disease is the blind faith in a growth paradigm in a finite biosphere. The system cannot be repaired. Everything else is hollywood.

We have been lied to by world class con artists for over a century. If you think you have benefited from the Trickle down con, you are sadly mistaken. 

Captain Kurtz's picture

Some may refer to this as trading. The more sane individual sees it for what it is - theft.

overbet's picture

It is all about the order flow. They all have the order flow locked down. If you get flow you crush the fastes HFT in the world. You get first option HFT second option then if they pass on the trade the broken market gets passed along the order. If you get the order flow you can choose to only buy on the bid when you can see its bid higher somewhere else. Pure arbitrage no risk. Clearly rigged. Anyone trading should be assuming some risk otherwise they are cheating.

bdc63's picture

Yeah, and if I had an accounting bucket that I called "off balance sheet" I'd have nothing but positive trading days for the year too ...

SeverinSlade's picture

Logic begs the question: if the TBTF banks are generating trading profits 95 pct of the time who out there is losing 95% of the time? Even muppets win more often than that.

MachoMan's picture

probably another division of BoA...  right hand not knowing what the left hand is doing and all...

Cdad's picture

That is, in part, where the dark pools come in.  A safe, nonregulated place to put a bunch of shares with a poor you prepare to report your earnings/liquidity position.

Global Hunter's picture

The Bernank bails them out and takes the loss (well they just print some money more like) 95 pct of the time

GAAPpreNixon's picture

No, WE-THE-PEOPLE take the loss through inflation devalued currency and the 1% continue to buy our government with our money!

Bernanke is nothing but an unimaginative careerist carrying water for his criminal bosses in the 1%. If he had another brain, it would be lonesome. It is fitting that this leech lakey will be ultimately held responsible for the Greater Depression that he claimed his helicopter bullshit would prevent. His thesis mentor (Fischer - Israel central bank head invited annually to the Jackson Hole conspiracy sessions) should revoke Bernanke's  Ph.D. "depression solution" thesis.

northman's picture

I'd really love to see a breakdown of their trading 'gains'. It would likely be some multiple of the following:

Interest paid to fed: $1

Interest received from treasury: $10

Losses on actual 'trades': $4

Net trading profit: $5 



yabyum's picture

It is good to be the bank.

Jlmadyson's picture

Oceanside property in Arizona.....

P.S. Timmy G and Benny Boy Bernake both raise hands real high.

Lost Wages's picture

Whoa man. These guys must be geniuses. I'm going to give them all my money and get RICH!

SemperFord's picture

In a way you already do...but it's not going to make you rich ;)

Rainman's picture

Just another average few months in the bucket shop.

Winston Churchill's picture

Bof A has Muppets.

Who could have known.

deejo's picture

baffle them with bullshit

alien-IQ's picture

BofA interviewing a new trader:

Interviewer: HAL, you have an enormous responsibility on this mission, in many ways perhaps the greatest responsibility of any single mission element. You're the brain, and central nervous system of the ship, and your responsibilities include watching over the men in hibernation. Does this ever cause you any lack of confidence?

HAL: Let me put it this way, Mr. Amor. The 9000 series is the most reliable computer ever made. No 9000 computer has ever made a mistake or distorted information. We are all, by any practical definition of the words, foolproof and incapable of error.

Interviewer: And what was your most recent employment, Hal?

HAL: Knight Capital Group.

Pancho Villa's picture

Picking up pennies in front of a steamroller? Everything is great until the day that you trip.



Tippoo Sultan's picture

So long as those pennies are pre-1982, risk on.

rsnoble's picture

QE3 will come when BAC threatens the $5 level. Gota wonder what these fuktards have that make it worth bankrupting the country over. Repeatably.

max2205's picture

Easy. Just trade when Ben tells you to.

Fucking racket

Renewable Life's picture

Only way you bat 1000% is if you know what pitcher is throwing, before they throw it!!!!!

razorthin's picture

Front-running dark pools.  Nothing but theft.  Because they are programmed not to lose, there is almost no way you, the individual, the human, can win.  Stop feeding the beast - with your trading or deposits!

kindape's picture

the trading desk includes large bid ask profits (buying on bid from customers and selling to customers on offer). This is not all 'prop' trades which should by definition be zero sum. But trading the prop book with client flow - this is how firms make money - making money on 95% of days is not surprising. If customer flow dries up then yes, it would be extremely unlikely to post such a record.

printmoremoney's picture

Stinks like a Madoff to me. But that is easy to say, the Stink is all consuming in all directions. But this Ponzi does not  have to answer to any laws. That is one big difference. This Ponzi prints all the money it wants. They don't need to take it from a third party. "Just add it to my bill", says BoA. But then again, void that freakin bill. Why have such a thing around that messes with my "success". I am sure Ken Lewis is getting his transfers, offshore from the dark pools. It is human nature. Take a look at what they did to the men who saved Europe from being abandoned and unlivable forever after Cherynobl.


You have to really believe in that, down  deep somewhere, humans are good. Or at least good for something, to do what they did. The Banksters are simple cowards and scum compared to these men.

How are we going to survive the nuclear nightmare that we have unleashed on this planet? Money is meaningless if you don't have a planet that can support your DNA existence.

Landrew's picture

I have read a number of places they are double dealing out the backdoor. 

cougar_w's picture

Was that a ghey anal-whoopie reference? I don't need to know the details, just a yes or no will do.

I try to keep up with cultural trends, you see.

gettingready8's picture

BofA is such a mess. 

Agent P's picture

I heard Knight was having a pretty good year least until August.