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Bank Of America Scrambles To Defend Itself From Henry Blodget's Allegations It Is Massively Undercapitalized

Tyler Durden's picture




 

Early this morning, Henry Blodget penned a post titled "Here's Why Bank Of America's Stock Is Collapsing Again" in which he used Zero Hedge data among other, to determine that the capital shortfall for the bank is between $100 and $200 billion. It took BAC exactly 6 hours to retort. Below is the full statement.

BANK OF AMERICA STATEMENT REGARDING HENRY BLODGET
2011-08-23 16:29:04.675 GMT

 

(The following is a reformatted version of a statement from Larry DiRita, a Bank of America spokesman. The statement was confirmed by the sender.)

 

Mr. Blodgett is making “exaggerated and unwarranted claims” which is what the SEC stated publicly when he was permanently banned from the securities industry in 2003.  The sovereign exposure is off by a factor of 10.  The commercial real estate figures are off by a factor of four.  The mortgage analysis was provided by a hedge fund that has acknowledged it will benefit if our stock price declines.  The recommendations on goodwill accounting would be prohibited by generally acceptable accounting practices.  Traditional bank valuation relies upon tangible book value per share, which excludes by definition 100 percent of goodwill and other intangibles.  As of June 30, our tangible book value per share was $12.65.

Oh ok, Bank of America, that explains it all. As for the mortgage analysis being provided by a hedge fund "that has acknowledged it will benefit if our stock price declines", co-authored by Zero Hedge, does that make it wrong? Last time we checked Muddy Waters made money on Sino Forest...

 

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Tue, 08/23/2011 - 13:35 | 1590961 NotApplicable
NotApplicable's picture

 I for one, would love to see financial stocks banned.

Tue, 08/23/2011 - 12:56 | 1590800 monopoly
monopoly's picture

It ends when the system blows up and we have a true "funding crisis" and not before. But it will end... new.

Tue, 08/23/2011 - 12:58 | 1590804 GoldRetriever
GoldRetriever's picture

Sung to the tune of "America" by Neil Diamond:

 

The Bank of America

 

TARP

Received billions in TARP

We take your homes

You sleep in your cars

 

Free

We'll get off scot-free

Lawyers huddle close

and pay off the AG's

 

Own the Prez and now your place

We're Bank of America

Stealing homes at record pace

We're Bank of America

 

Homes, dump them back on Fannie Mae

We robo-sign and that's okay

In the eyes of the courts

In the eyes of the courts

 

Loans, what we hold is toxic waste

but Mark-to-Model is our case

Makes shareholders feel warm

Makes shareholders feel warm

 

Accounting from the netherworld

We're Bank of America

Our real books would make you hurl

We're Bank of America

 

Gotta scheme not fair or square

We're Bank of America

Turn your dreams into nightmares

We're Bank of America

 

We're Bank of America

We're Bank of America

We're Bank of America

We're Bank of America

You pay! But can't stay!

 

My country disses me

Today!

Where's justice and liberty?

Today!

To justice we do cling

Today!

Pitchforks we bring

Today!

 

 

Tue, 08/23/2011 - 13:00 | 1590814 monopoly
monopoly's picture

For me, too early to short,  to much of a gamble when the head inmate will spill saliva on his beard as he advises the planet on Friday. No shorts.

Tue, 08/23/2011 - 13:16 | 1590880 Crisismode
Crisismode's picture

Dick works in Charlotte too?

Tue, 08/23/2011 - 19:44 | 1592671 Boop
Boop's picture

Nah, Stamford

Tue, 08/23/2011 - 14:25 | 1591359 IQ 145
IQ 145's picture

Now? Don't you ever look at price charts. that would be a good way to go broke. It works like this; it already went down, so now it goes up. Whereas, if it had gone up a long ways for a significant time, then you could short it. You don't short bottoms, for christ sake.

Tue, 08/23/2011 - 20:45 | 1592818 Boop
Boop's picture

I think you missed the sarcasm. All the Bovester was claiming is that a falling stock price doesn't affect BAC because it's cash rich, not recommending investors seeking a gain should short BAC.

From the link:

Does no one know how to “break a bank”? Must he hold your hand through everything?

“There is no impact whatsoever on Bank of America’s balance sheet, based upon the price of its stock in the open market. If the price of the stock goes to a penny a share, it has no impact on the balance sheet of Bank of America. Bank of America sells the stock to the public, it takes in the money, and that is the end of the transaction as far as Bank of America is concerned. If you’re going to break a bank, you’re going to have a run on its deposits. That’s not happening. Exactly the opposite is happening…Deposits are pouring into Bank of America…Or, as in the case of the fourth quarter of 2008, you’ve got to bust a bank by making it repay all of its short-term debt immediately. Bank of America has so much cash on its balance sheet that it can pay back all of its short- term debt, it could pay back a big chunk of its long-term debt and still have excess cash on the balance sheet. You can’t break the bank by driving the price of the stock lower, particularly if the bank is as cash-rich as this one is with deposits pouring in as fast as they are.”

Tue, 08/23/2011 - 13:00 | 1590818 wombats
wombats's picture

It looks like their stock is recovering a little from this morning's lows.  Maybe they aren't as bad as everyone is saying.

 

Tue, 08/23/2011 - 13:00 | 1590820 vast-dom
vast-dom's picture

I can't wait for BofA to fail. And then we can print up all of our 0hedge reports and send them out snailmail and fax gratis to all newly out of work BofA Assholes!

 

Tue, 08/23/2011 - 14:00 | 1591132 Comay Mierda
Comay Mierda's picture

there are plenty of good people at BOA that I will be sad to see without jobs.  Watch you wish for on others because it will come back to you

Tue, 08/23/2011 - 18:01 | 1592384 halflink123
halflink123's picture

There are also "plenty" of very, very, very bad people at BAC who will do anything, even destroy their own country, to preserve their jobs.

Tue, 08/23/2011 - 17:15 | 1592233 InExile
InExile's picture

if you're not of work now, then you will be if they blow.

Tue, 08/23/2011 - 17:58 | 1592373 halflink123
halflink123's picture

Wrong - the sooner this crap blows the better for all of us.

 

"Big man, pig man, ha ha CHAARAADE YOU ARE!" as Pink Floyd would say.

Tue, 08/23/2011 - 13:00 | 1590821 buzzsaw99
buzzsaw99's picture

BAC stock not flying high after this press release? Shocking.

Tue, 08/23/2011 - 13:03 | 1590829 gwar5
gwar5's picture

OUCH!  Shrapnel in the butt for BAC.

 

When the smoke clears from BAC, people will be dumpster diving GS, JPM, and CITI.  Curious people want to know. There is a growing credibility gap with all the banks.

 

Tue, 08/23/2011 - 13:03 | 1590832 Little John
Little John's picture

  Banks die the same way people do - denial, anger, bargaining, acceptance.  I suggest BAC is getting to the third step.  Well Brian, it looks like you'll be seeing some folks in court all right - you just won't be sitting at the plaintiff's table.

Tue, 08/23/2011 - 13:40 | 1590998 NotApplicable
NotApplicable's picture

Except that people leave a rotting corpse as evidence, while toxic bank assets just discounted to zero over time in a series of sweet-heart deals with gov subsidies.

Tue, 08/23/2011 - 13:04 | 1590837 pamriallc
pamriallc's picture

Henry's old firm was Oppenheimer.  He was hired by Merrill because their own analyst wouldn't print the $600.00 price target reports on Amazon.  Henry's "truth telling" rally-cry is the rally-in-reverse puffery.  Hardly credible.  Jumping on yet another bandwagon trying to make a few bucks for a few months.  Snake oil then.....snake oil now.....

Tue, 08/23/2011 - 13:33 | 1590946 Earl of Chiswick
Earl of Chiswick's picture

We like Henry

sordid past and all

 

New York and Washington, DC, Apr. 28, 2003 -- The Securities and Exchange Commission, NASD and the New York Stock Exchange — following a coordinated investigation of allegations of undue influence of investment banking interests on research analysts at brokerage firms — today announced that Henry Blodget, a former managing director at Merrill Lynch, Pierce, Fenner & Smith, Incorporated and the senior research analyst and group head for the Internet sector at the firm, will be censured and permanently barred from the securities industry, and will make a total payment of $4 million to settle the charges against him.


The regulators charged that, among other things, Blodget, of New York City, issued fraudulent research

http://www.sec.gov/news/press/2003-56.htm

Tue, 08/23/2011 - 13:39 | 1590990 TruthInSunshine
TruthInSunshine's picture

 

 

Hello, Ad Hominen Maximus.

When you don't want the facts to get out, keep trying to distract everyone by attacking the messenger, bitch!

Tue, 08/23/2011 - 13:08 | 1590857 IMA5U
IMA5U's picture

thats great and all but the market doesnt care

 

and when bac is resolved and in the rear view mirror it will give the market an excuse to go higher

Tue, 08/23/2011 - 13:16 | 1590881 Defenestrate
Defenestrate's picture

Hello Brighter Minds. Tangential but urgent question:

Due to circumstances beyond my control, we're closing on a house Monday. Bank of America is the entity I'm supposed to wire the nest egg to for a downpayment.

Is there any way their problems could mess up my closing? Any risk in wiring Friday? Deeply appreciate any insight. Payback in positive karma will be substantial. Got a family to protect.

Tue, 08/23/2011 - 13:37 | 1590974 Eyes on the World
Eyes on the World's picture

Why not reschedule the closing for 8/30?  That way you know if they make it to Tuesday and still give yourself another 24-hours until 8/31 if something normal pops up at closing.  The main thing (from an interest point of view) is to close just prior to the end of the month.  8/29 is not necessary.  8/30 is good.

Am I wrong anyone?

Tue, 08/23/2011 - 13:18 | 1590888 ZackAttack
ZackAttack's picture

Book-talkers accusing other book-talkers of talking their book.

Mr. Kettle! Paging Mr. Kettle to the white courtesty phone! It's a Mr. Pot.

Tue, 08/23/2011 - 13:28 | 1590928 lolmao500
lolmao500's picture

BTW, just on the CNN ticker, I saw FED TO UNLEASH QE3... for a few seconds...

Tue, 08/23/2011 - 13:34 | 1590958 DefiantSurf
DefiantSurf's picture

subliminal messaging, buy the ramp!

Tue, 08/23/2011 - 13:29 | 1590929 Dick Darlington
Dick Darlington's picture

Bank of Scamerica's statements are almost as credible as those coming from the insolvent Greece.

08-23 13:01: Greek finance minister expects economic growth next year

Tue, 08/23/2011 - 13:33 | 1590949 DefiantSurf
DefiantSurf's picture

is that like "Free Beer Tomorrow" ?

 

 

Tue, 08/23/2011 - 13:34 | 1590955 scratch_and_sniff
scratch_and_sniff's picture

FIGHT CLUB, OMG LOL. GRRR HIT EM IN THE ANTENNA, THEY'RE USELESS WITHOUT IT!!

Tue, 08/23/2011 - 13:35 | 1590962 prophet
prophet's picture

...   and our stock price is off by a factor of ten since Mr. Blodgett published "The Wall Street Self-defense Manual: A Consumer's Guide to Intelligent Investing"

We are seeking a resolution to this matter.

Tue, 08/23/2011 - 13:35 | 1590967 Catullus
Catullus's picture

They defended their goodwill? How about you defend that BNY Mellon settlement price for countrywide.

Tue, 08/23/2011 - 13:38 | 1590989 zeroman
zeroman's picture

I DON'T KNOW WHY EVERYONE IS SO SCARED HERE. DIDN'T ANYONE LEARN ANYTHING?  HERE ARE THE THREE OPTIONS FOR BAC.

 

1.  RAISE CAPITAL THROUGH EQUITY MARKETS DILUTING EXISTING SHAREHOLDERS

2.  RAISE PRIVATE PLACEMENT INCLUDING THE FEDERAL GOVERNMENT BUYING UP TO 50% OF BAC AT A PRE-ESTABLISHED PRICE YET TO BE DETERMINED

3.  LET IT BECOME A CRISES AND GIVE IT FOR A SMALL AMOUNT TO JPM OR WFC WITH THE GOVERNMENT TAKING LIABILITY FOR ALL THE CRAP.

 

THATS IT.  NO WAY IN HELL THEY WILL LET BAC JUST FAIL. THAT WOULD BE INSANE AT THIS STAGE OF THE GAME TO BAIL THE WHOLE WORLD OUT AND BECAUSE RON PAUL DOESN'T LIKE YOU AND WE DON'T LIKE YOU YOU SUDDENLY CHANGE YOUR GAME PLAN AND LET EVERYTHING GO TO HELL.

Tue, 08/23/2011 - 13:46 | 1591040 NotApplicable
NotApplicable's picture

Simmah down, now!

Tue, 08/23/2011 - 14:03 | 1591167 Twice a Day
Twice a Day's picture

Zeroman, spot on with No.3.

Last week or so received a new BAC credit card while my current one expired 04/2014.

Completely new account number assigned with same expiration date 04/2014; seems the IT systems are in place for JPM and /or WFC to takeover portions of BAC.

You're correct Gov will back stop this, minimize foreclosure suit payouts, and absorb the toxic assets in the shadow land.

Good Job!

Twice a Day

Tue, 08/23/2011 - 13:41 | 1591002 ThisIsBob
ThisIsBob's picture

All going to JPM with about a zillion in gubbermint help, I hear.

Tue, 08/23/2011 - 13:42 | 1591010 TruthInSunshine
TruthInSunshine's picture

Sock Puppet Operation 4.xx has infiltrated Zero Hedge.

There are Sock Puppets everywhere.

You can easily detect them due to the fact that their IQs can't possibly be more than 82, so they're probably making about $200,000 a year with retirement at 50 (full pension, the works).

Tue, 08/23/2011 - 13:45 | 1591031 Lmo Mutton
Lmo Mutton's picture

I am doing my part to help them. They can have my $3.27 that I left over there.

Tue, 08/23/2011 - 13:48 | 1591047 NotApplicable
NotApplicable's picture

You should write a check for $3.26.

Tue, 08/23/2011 - 14:28 | 1591380 Shirley Wilfahrt
Shirley Wilfahrt's picture

You should write 326 checks for a penny.

:)

Tue, 08/23/2011 - 13:52 | 1591076 PulauHantu29
PulauHantu29's picture

Would a banker really lie to us?

Tue, 08/23/2011 - 13:57 | 1591102 DaveInC.S.A
DaveInC.S.A's picture

I have zero sympathy for BOA. They catered to the illegals in the Charlotte area giving them mortgages and credit cards.

Something to consider. The Democrat Convention is coming to Charlotte. I can't see Obama and the Dems coming here with the Charlotte economy completely tanked due to BOA going under. There'd be too many people out of work with nothing better to do than protest.

Tue, 08/23/2011 - 14:29 | 1591388 Shirley Wilfahrt
Shirley Wilfahrt's picture

Amerikka! Fuck Yeah!!

Tue, 08/23/2011 - 14:08 | 1591228 New_Meat
New_Meat's picture

Hmmmm:

"Commentators on the Internet Tuesday, some using research from a hedge fund which has admitted to shorting BofA, have raised the ante by wondering if the bank needs even more massive sums."

-By David Benoit, Dow Jones Newswires; 212-416-2458, david.benoit@dowjones.com

Tue, 08/23/2011 - 14:15 | 1591291 iLoveMisesToPieces
iLoveMisesToPieces's picture

I'm still convinced Bank of America is nothing more than the toxic waste dump for the real banksters.

Tue, 08/23/2011 - 14:18 | 1591312 Cone of Uncertainty
Cone of Uncertainty's picture

The person that wrote that probably has already been killed off.

In fact, its clear that the PR hack behind that was indeed a double agent plant that was given the task of making BOA look as dumb as possible, thus, adding fuel to the already growing bon fire of epic and unimaginable proprotions.

Tue, 08/23/2011 - 14:37 | 1591447 damnitalready
damnitalready's picture

As of June 30, our tangible book value per share was $12.65.

Right, that's why you're trading at less than half that and people are still selling.  


Tue, 08/23/2011 - 15:46 | 1591796 Joe Sixpack
Joe Sixpack's picture

"The sovereign exposure is off by a factor of 10.  The commercial real estate figures are off by a factor of four. "

 

Which direction was he off?

Tue, 08/23/2011 - 17:10 | 1592216 InExile
InExile's picture

Not for nothin', but Henry Blodget?1? Who gives a flyin' fuck what he thinks with his resume.  Didn't even get the numbers right in his analysis.  BAC might be hiding the extent of its loss content, the guy was a bullish internet analyst valuing companies based on eyeballs and viewership before the collapse.

 

Tue, 08/23/2011 - 17:55 | 1592362 halflink123
halflink123's picture

Any time any corporation is as frantic as Bank of America - literally trashing blog posts - that is a very, very bad sign for them.

 

Maybe we should ban short selling of BAC? Hahaha.

Tue, 08/23/2011 - 19:33 | 1592622 Quantum Nucleonics
Quantum Nucleonics's picture

At what stock price does Dodd-Frank kick in and the Feds step in with the bailout.  This is exactly why Dodd-Frank was written, right?  Maybe we'll get to see in action what a joke the law was.  Which will go first, ObamaCare or Dodd-Frank?

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