This page has been archived and commenting is disabled.

Some Follow Up Questions (And Recommendations) For Brian Moynihan

Tyler Durden's picture


In the aftermath of Bank of America's direct answer to Henry Blodget, and indirect response to Zero Hedge, we would like to counter with some additional attempts to bring clarity, and hopefully closure, to the extremely (and regrettably) opaque situation that the bank and its investors (not to mention employees) find themselves in, and which has so far cost Bank of America about $80 billion in market capitalization. Indeed, as Bank Of America has noted, "The mortgage analysis was provided by a hedge fund that has acknowledged it will benefit if our stock price declines" - we fail to see how this is a credible defense: one simple case study reminds us that David Einhorn was publicly short Allied Capital and Lehman Brothers, yet his thesis was absolutely spot on, and the financial institutions in question ended up in bankruptcy. We offer Bank of America the chance to respond to two simple questions, which should eliminate the specter of a litigation induced liquidity crunch. As for the prospect of bank insolvency, we are confident that the reinstatement of Mark to Market any minute now will provide sufficient color on that particular issue.

Dear Mr. Moynihan,


Your financial statements make some assumptions which belie your mortgage putback reserves.  To help us understand why you are adequately reserved, please tell us.


a).  If the repurchase rate assumption in the Bank of New York settlement is changed from 40% to 100%, how much will that increase your mortgage putback liability and, hence, your reserves?  David Grais, in his opposition to the settlement, says that changing that assumption alone could increase private label putbacks to $27bn versus the $8.5bn expected in your financial statements.  IF that scenario played out, are you under-reserved by $18bn+?


b).  If you lose the loss causation ruling which is coming up in MBIA vs. Countrywide, why will home prices matter – in your Fairholme conference call, you told us that BAC’s mortgage putback reserves incorporate a 3% decline in home prices followed by a 1% increase.  MBIA states that their estimates “of breach rates primarily based upon loans with credit breaches or credit and compliance breaches ... these types of breaches are not judgmental and cannot be cured.”  So if you lose the loss causation ruling, by how much will your putback reserves change and why should we have confidence in your methodology?


Please note that your own 10-Q highlights that if BAC is incorrect in these assumptions, your mortgage putback reserves could prove to be insufficient.

And a few practical ideas...

A simple way Moynihan can put a lid on this stuff: PICK UP THE PHONE, CALL YOUR COUNTERPATIES AND SETTLE TO PUT EXPOSURES BEHIND.  Things I would do:


a). Step 1: Write a check to resolve FGIC, AMBAC, SYNCORA and MBIA litigation: cost $9 billion.  After settling Assured, it doesn’t make any sense to try and fight the validity of monoline claims.


b). Step 2: Use the goodwill you have left with the Federal Government and pressure GSEs into modifying your agreement to pay more and conclusively put a cap on the exposure – not report increase in GSE claims and reserves every quarter.


c). Step 3: Resolving steps 1 and 2 gives a little breathing room in resolving the third bucket.  Enter negotiations, bite the bullet and take the pain to reach a comprehensive settlement.


HAND TO HAND COMBAT’ has cost you over $80 billion in market value, perhaps it’s a flawed strategy...


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 08/23/2011 - 13:54 | 1591083 IMA5U
IMA5U's picture

too many words


all market participants and "the folks" need to know is that europe is smarter than us and jackson hole is right around the corner

Tue, 08/23/2011 - 14:39 | 1591462 bankrupt JPM bu...
bankrupt JPM buy silver's picture

did Brian Hedge his $2 mill at $4 after he saw the bears 7 vid? lol....loser.

Tue, 08/23/2011 - 15:30 | 1591724 AldousHuxley
AldousHuxley's picture

Bank of America, please take Shitty bank down with you when you guys disappear. You banksters make communist state-owned Chinese banks look more capitalist!

Tue, 08/23/2011 - 13:54 | 1591086 TruthInSunshine
TruthInSunshine's picture




I'd like Obama, Geithner, Bernanke & Congressional leaders to pledge that the era of disastrous, taxpayer punitive BAILOUTS IS OVER.


Prepare for AIG 2.0

C'mon, Bernank, give 'em what they want at Jackson Hole, but at least wear rubber gloves and lots of lube for the sake of taxpayers' rights.

Tue, 08/23/2011 - 14:46 | 1591507 Poetic injustice
Poetic injustice's picture

I promise it is over. Further necessary actions will be taken on off-balance sheet and surface much later when nobody will care anymore.

Tue, 08/23/2011 - 16:13 | 1591976 NewThor
NewThor's picture

Dear Bryan Morenehand,

Does Bernanke's sperm taste like sulfur and brimstone?

Why does your bank suck so bad?

Where is your Elenin bunker?

IF you fucking evil fucking bastard America raping fucks are always bitching about US GOV intervention and regulation, shouldn't you be standing on the highest building screaming "LET US FAIL!"

Do you think God is going to have mercy on your money loving soul?

Can I kick you in the balls?

Or would you like a good old fashioned fist fight?


Tue, 08/23/2011 - 13:55 | 1591094 Robslob
Robslob's picture

But We Will Win in the End...said Custer as he bravely charged into battle...

Tue, 08/23/2011 - 13:56 | 1591096 ZeroPoint
ZeroPoint's picture

How about also not trying to foreclose on properties that don't even have a mortgage with Bank of America or anyone else for that matter?

And a $12.00 a month maintenance fee? I'll take my business elsewhere.


Tue, 08/23/2011 - 13:56 | 1591097 Chain Gun Smoke
Chain Gun Smoke's picture

oh snap

Tue, 08/23/2011 - 13:56 | 1591098 lolmao500
lolmao500's picture

A few facts.

- 1 trillion : BAC deposits.

- 10 billion : FDIC $$ to cover failed banks

Rumors that JPMorgan takes over with the US government providing $100 billion in exchange of prefered shares.

Me thinks, doesn't matter how it ends up, the taxpayers will get shafted.

Tue, 08/23/2011 - 13:56 | 1591100 Gubbmint Cheese
Gubbmint Cheese's picture

Or, step down as CEO to, "devote more time to your family".

Tue, 08/23/2011 - 13:57 | 1591105 BlackholeDivestment
BlackholeDivestment's picture

just had a massive quake in dc, shook the whole house, stuff fell

Tue, 08/23/2011 - 15:51 | 1591822 NewThor
NewThor's picture

Maybe Comet Elenin will open an account with Bank of America.

Oh. did you hear the latest news, the 3 million mile tail is full of cyanide.

"1/3 of the stars were swept to Earth. And the waters became bitter. Many men died from drinking"

Tue, 08/23/2011 - 13:59 | 1591121 goldfreak
goldfreak's picture

anybody felt a shake in New York?

Tue, 08/23/2011 - 14:06 | 1591211 Clampit
Clampit's picture

I felt it in Colorado...vee haav very sensitive instruments here.

Tue, 08/23/2011 - 13:59 | 1591124 Captain Queeg
Captain Queeg's picture

Although Einhorn's analysis was proven out, Allied Capital was never in bankruptcy.

Tue, 08/23/2011 - 14:01 | 1591146 kito
kito's picture

tyler, what about their market exposure in europe, what about the continued writeoffs that will occur as home prices continue to tank down to cash value?

Tue, 08/23/2011 - 14:01 | 1591152 baby_BLYTHE
baby_BLYTHE's picture

how can Brian M justify putting his entire networth in one single entity?

Does the man want to crucify himself? He is damning himself to living in a gutter. What stupidy. Power really does corrupt.


Tue, 08/23/2011 - 16:26 | 1592029 Random_Robert
Random_Robert's picture

"how can Brian M justify putting his entire networth in one single entity?"

- Simple... he really is THAT stupid.

Tue, 08/23/2011 - 14:03 | 1591165 SILVERGEDDON

Buttfucked On Account of Being Ordinary Americans. New age double entendre, countered by Bringing On Armageddon, and Buying Obvious Assets, bitchez! 

Tue, 08/23/2011 - 14:03 | 1591169 gookempucky
gookempucky's picture

As for the prospect of bank insolvency, we are confident that the reinstatement of Mark to Market any minute now will provide sufficient color on that particular issue.

We all know that is not going to happen.....whoa almost forgat that AU will set all things mark to market regardless.

Tue, 08/23/2011 - 14:04 | 1591188 Sudden Debt
Sudden Debt's picture





Tue, 08/23/2011 - 14:06 | 1591190 Dick Darlington
Dick Darlington's picture

As for the prospect of bank insolvency, we are confident that the reinstatement of Mark to Market any minute now will provide sufficient color on that particular issue.

Exactly! If all is golden as the global banking cartel keeps telling us then there's no need for mark to unicorn. So please, Bank of Scamerica, prove us all wrong.

Tue, 08/23/2011 - 14:10 | 1591253 monopoly
monopoly's picture

"Mark to market." Right Tyler. You bet. Give them an hour or two and they will change their accounting. You want honesty, integrity and correct financial numbers. I wish.

Tue, 08/23/2011 - 14:16 | 1591296 NOTaREALmerican
NOTaREALmerican's picture

Re: we are confident that the reinstatement of Mark to Market any minute now will provide sufficient color on that particular issue

BAC would like to point out that Mark to Market is a CULT accounting movement that is on record as seeking to destroy the very fabric of American society which BAC is heroically determined to defend.  

Only trrrrssss and others who hate Merica - and hate the flag and hate eagles and hate the troops - would publicly support an un-Merican accounting THEORY like Mark to Market.  

BAC calls on the SEC to investigate Zero Hedge and other unpatriotic economic trrrssss organizations that seek to destroy this great and glorious nation.  

Tue, 08/23/2011 - 17:56 | 1592368 unununium
unununium's picture

What an incredibly succinct summary of the Wall Street Journal comment board.  Thank you!

Tue, 08/23/2011 - 14:19 | 1591318 ZeroPower
ZeroPower's picture

Nicely done.

Might even solicit a response from their PR team like Goldmans did last year or so.

Tue, 08/23/2011 - 14:51 | 1591540 Surly Bear
Surly Bear's picture

ZeroPower, I love your avatar!

~S. Bear

Tue, 08/23/2011 - 14:25 | 1591362 JW n FL
JW n FL's picture

$1.2 Trillion in Secret Loans to how many NON-U.S. Companies?

$20 Million a Day?

Tue, 08/23/2011 - 14:35 | 1591429 JW n FL
JW n FL's picture

This week Max Keiser and co-host, Stacy Herbert, look at how quantitative easing is good for the rich, bad for the poor and how sterling is offering no refuge. In the second half of the show Max talks to Richard Heinberg, author of The End of Growth, about the role of energy in the current debt crisis.

Tue, 08/23/2011 - 14:27 | 1591373 kito
Tue, 08/23/2011 - 14:29 | 1591381 Cone of Uncertainty
Cone of Uncertainty's picture

Dear Mr. Moynihan,

You are fucked.


Cone of Uncertainty

Tue, 08/23/2011 - 14:36 | 1591431 RobotTrader
RobotTrader's picture



Looks like TPTB pulled off the "impossible"

Giant bids coming into KRE while gold and the XAU are being decimated.

Amazing how they are able to pull rabbits out of their hats time and time again.

Tue, 08/23/2011 - 14:49 | 1591529 topcallingtroll
topcallingtroll's picture


I was petrified to short gold yesterday, which means I probably should have.

I want to buy stocks today......hmmm....

Tue, 08/23/2011 - 18:00 | 1592376 unununium
unununium's picture

Look what the cat dragged in.

Wed, 08/24/2011 - 11:48 | 1595327 d00daa
d00daa's picture



"the market isn't pricing in qe3, THE MARKET IS PRICING IN AN ECONOMIC BOOM, LED BY THE US CONSUMER" - momofader


amazed you still have the balls to show yourself around here.  do you still have a job?

Tue, 08/23/2011 - 14:37 | 1591445 killben
killben's picture ...

"The government will support the deal with a $100 billion investment in preferred shares issued by the combined entity"

Our Timmy is hard at work.One has to salute Brian Moynihan. He picked the right dog to do the job.


When Timmy wanted to leave ... it was good news for America. Hopefully at least Obama will be sent packing in 2012..


Tue, 08/23/2011 - 14:50 | 1591534 sheep92
sheep92's picture

quick question for those more knowledgable in mortgage put backs.  If they have 18 billion dollars of mortgages put back why would they have to increase reserves by 18 billion.  Doesn’t that mean that all the put back mortgages are worth exactly zero ?

seems odd but what do i know

Tue, 08/23/2011 - 15:11 | 1591634 Surly Bear
Surly Bear's picture

My understanding is the mortgages they hold are assets. If they are 'putback,' then they are repurchased by the loan originator. If that happens then BAC does not have 18 billion in assets backing their liabilities, and they would need to raise capital through a stock offering, bond sale, or government bailout. I am an accountant, and I could be wrong, but this is my 2 cents.

Tue, 08/23/2011 - 15:00 | 1591587 steveo
steveo's picture

I did some work last Thursday on Comet Honda possibly causing earthquakes, check it out.

Tue, 08/23/2011 - 15:01 | 1591592 firstdivision
firstdivision's picture

Dear Tyler,

Well I'd like to first touch upon that first question. You see.....oh shit there's an earthquake. Gotta go.

B. Moynihan

Tue, 08/23/2011 - 15:09 | 1591618 jaek117
jaek117's picture

Any Ron Paul supporters in here?  We're trying to organize a Revolution Super Concert.  Please check out the thread on  Thanks.

Tue, 08/23/2011 - 15:13 | 1591639 fishface
fishface's picture

meanwhile back at Fight Club...


"Tyler, if you would fight a bank which one would it be?"

Tue, 08/23/2011 - 15:14 | 1591644 Smokey1
Smokey1's picture

BOA eats shit.

Tue, 08/23/2011 - 15:17 | 1591661 Texas Ginslinger
Texas Ginslinger's picture

In 2002 Henry Blodget was banned from the securities industry and paid a $4 million fine for emailing conflicting info that his employer, Merrill Lynch published.  Merrill Lynch paid a $200 million fine for issuing fraudulent research.

Why should we believe him..??

Tue, 08/23/2011 - 15:34 | 1591737 Poetic injustice
Poetic injustice's picture

Because he is honest this time. *wink wink* Just believe and buy what he says to buy.

If still unsure, ask Robotrader for advice on investments.

Tue, 08/23/2011 - 15:34 | 1591738 Poetic injustice
Poetic injustice's picture

Because he is honest this time. *wink wink* Just believe and buy what he says to buy.

If still unsure, ask Robotrader for advice on investments.

Tue, 08/23/2011 - 15:27 | 1591707 BetTheHouse
BetTheHouse's picture

 BAC is going bankrupt, the european banks are insolvent and exposed, and my FAZ is still getting raped.  Where does a regular guy get a break in this crooked town?

Tue, 08/23/2011 - 15:33 | 1591732 Irish66
Irish66's picture

up 270 and BAC at 6.18 nothing more to see here

Tue, 08/23/2011 - 15:44 | 1591780 MoneyWise
MoneyWise's picture

Buy BAC, sell GOLD, bitchez!!! Told ya.. :)))

Tue, 08/23/2011 - 15:45 | 1591784 Ausperity
Ausperity's picture

What's with the metals being crushed today?  I haven't read about margin hikes... Is this a profit-taking trend?

Tue, 08/23/2011 - 15:45 | 1591789 buzzsaw99
buzzsaw99's picture

moynihan: how many nonperforming loans are you currently holding at face on the books? enuff sed.

Tue, 08/23/2011 - 15:48 | 1591808 AldousHuxley
AldousHuxley's picture

US trying to make sure Euros take the first hit. Meanwhile Iran and China building up their gold reserves and military.


Western leaders must be eliminated. Corrupt AND ineffective.


Check out NBG breaking $1/share.

Tue, 08/23/2011 - 16:16 | 1591988 buzzsaw99
buzzsaw99's picture

That's like the restaurant critic who said the food was terrible AND the portions were small.

Tue, 08/23/2011 - 17:10 | 1592217 AldousHuxley
AldousHuxley's picture

I doubt the restaurants would charge critics money for review.


I'm ok with current leadership if I pay no taxes at all.



Tue, 08/23/2011 - 15:55 | 1591852 youngandhealthy
youngandhealthy's picture

Tyler....5 stars!!!!

Eventhough I wouldnt like the general market outcome....this is a brilliant post.

Tue, 08/23/2011 - 15:59 | 1591877 orangedrinkandchips
orangedrinkandchips's picture

See, you are between 40% and 100%.....that is a big swing...Like life are always better off expect the worst and hope for the best. Even if it isnt 100%- the worst- it wont be 40% either! Safe to assume 85% would be the worst but still...9B is better than


You cant blame them 100%....they had an uzzi stuck in their face and were made to "marry" Merrill Lynch...Cunt-rywide they do get some's a fucking mess no matter which way you look at it....


And home prices are bottoming? Shit nigga please as Creeper would say on Dolemite.

Tue, 08/23/2011 - 16:02 | 1591892 Tunga
Tunga's picture

Just put it on the card.

Tue, 08/23/2011 - 16:05 | 1591903 MoneyWise
MoneyWise's picture

Now it's a real move, Gold weeds getting first bite in the a$$.. Tyler probably large BAC shareholder and shorting GOLD actively. *LOL*

Tue, 08/23/2011 - 16:20 | 1592007 Clearly_Irrational
Clearly_Irrational's picture

CNBC just quoted Zerohedge:


Now that's a sign of the end times if I've ever seen one, heh.

Tue, 08/23/2011 - 16:24 | 1592020 Problem Is
Problem Is's picture

World's OVER... Doomsday in 5,4,3...

Tue, 08/23/2011 - 16:21 | 1592008 truont
truont's picture

"As for the prospect of bank insolvency, we are confident that the reinstatement of Mark to Market any minute now will provide sufficient color on that particular issue".
That's right, give 'em hell, Tyler!

Tue, 08/23/2011 - 16:22 | 1592016 Problem Is
Problem Is's picture

Some Follow Up Questions (And Recommendations) For Brian Moynihan
Recommendation: Go stuff a giant foot long corn dog down your pie hole like Bachmann and Perry, you value destroying douche Mo(ron)-ihan...

Tue, 08/23/2011 - 17:41 | 1592321 FreeNewEnergy
FreeNewEnergy's picture

Wow! ZH gets mentioned on Fast Monkey, er, Money on CNBS. One guys said ZH was a place to plant stories, so I thought my thoughts of BofA should be planted here along with Blodget's and everyone else's.

BofA Near Death Experience?

Tue, 08/23/2011 - 19:53 | 1592704 Dragonsgrace
Dragonsgrace's picture

This was an interesting comment to me..

"HAND TO HAND COMBAT’ has cost you over $80 billion in market value, perhaps it’s a flawed strategy..

I have been out on the "front line" with homeowners who are suing the banks over faulty mortgage foreclosures.  I have first hand experience that BofA is using the same "hand to hand" combat with homeowners as well as the monolines and investors.  Gee....I am so shocked you would think they would treat their former customers better....right?  

Some of the others have actually started to look at the case and say...."gee we may have messed this one up" and trying to make sense out of it.  Not BofA.  No matter how much and how clearly they fuck something up...they do not want to admit or see a problem.  I guess that might be part of the reason they spent $3.0 billion on litigation costs in Q4 2010.  

They are out of their minds from what I can see.  If this "strategy" is coming from their general counsel the guy should be roasted by the shareholder, the board and ceo.  If this is the CEO the board should perhaps provide some "guidance" to him or fire his ass.  Just sayin. 

Do NOT follow this link or you will be banned from the site!