"We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices," Chief Executive Kenneth D. Lewis said ..."
There's a good analysis over at Hussman's site focusing on the correlation between wages, jobs and consumer spending. Upshot is that consumer spending is likely to fall off a good deal more than what is currently being "priced into the market".
Assuming 2 percent of the bank's home-equity loans are uncollectible this year, the cost may be $2.3 billion, Fitch Ratings analyst John Mackerey said in a March 14 report. If the bad loans reach 5 percent, the damage could total $5.9 billion, he said.
About half of Bank of America's home-equity loans are in California, Nevada, Arizona and Florida, four states where housing prices are sliding faster than the national average.
I don''t know why anyone would be particularly surprised by this. They did book a profit, so won't need to raise capital. They are too big to not get nicked somewhere.
I see it as a positive that they are being realistic about their portfolio. A couple of more quarters like this and they may be done.
I see the stock is down a half buck and it is being blamed for the dollar weakening against the euro and the market being down.
I think they will have a good year if they can earn their dividend. I recall that they have some convertible bonds @ 50 and the CW thing hanging over them. Tier 1 capital ratio up (slightly).
"We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices,">>
If you "bad" consumers would just pay your bills then WE would be fine....
and we're not at all worried about the crap percolating in our balance sheet..
They will not walk from CFC. They purchased them for the mortgage business platforms and servicing. Both of which they have failed at miserably in the past. BTW CNBC just announce that the do NOT plan to cut dividend but expect further losses.
"We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices," Chief Executive Kenneth D. Lewis said ...
I'm not as concerned as Mr. Lewis. You see, I firmly believe that Bubbles Ben will open the discount window to any consumer who has taken on too much debt and finds himself in a liquidity crisis.
If the embarrassment of going to the Fed's discount window is too much to bear (you know how the neighbors will talk...), BB will then open the Term Consumer Lending Auction Facility (TCLAF) that will allow consumers to purchase treasuries in order to swap with their creditors for the amount of outrageous credit card, subprime, and car loan debt that they have for up to 90 days until they can resolve their liquidity crisis.
first?? primero?? Numero Uno??
Did BofA even get involved in subprime directly?
isnt this at this point simply all credit and not just subprime???
Tis a flesh wound..
"We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices," Chief Executive Kenneth D. Lewis said ..."
There's a good analysis over at Hussman's site focusing on the correlation between wages, jobs and consumer spending. Upshot is that consumer spending is likely to fall off a good deal more than what is currently being "priced into the market".
Hussman Funds - Consumer Spending Break-Down : April 2008
Black knights all
)
Where is the layoff announcement? Can't have a rip roaring stock rally without that:-)
Bank of America stock has already been trading as if the dividend will be cut (unless you think a 6.8% yield is normal).
Didn't Buffett buy some BofA a way back? Not a lot, but some. Wonder why. I guess he is not a market "timer."
[Upshot is that consumer spending is likely to fall off a good deal more than what is currently being "priced into the market".]
Except on fuel and food.
Is it Friday already?
And seems like more to come:
Assuming 2 percent of the bank's home-equity loans are uncollectible this year, the cost may be $2.3 billion, Fitch Ratings analyst John Mackerey said in a March 14 report. If the bad loans reach 5 percent, the damage could total $5.9 billion, he said.
About half of Bank of America's home-equity loans are in California, Nevada, Arizona and Florida, four states where housing prices are sliding faster than the national average.
Bank of America Net Income Falls 77% on Writedowns (Update7) - Bloomberg.com
A brick of nickles a day keeps wealth confiscation away.
I don''t know why anyone would be particularly surprised by this. They did book a profit, so won't need to raise capital. They are too big to not get nicked somewhere.
I see it as a positive that they are being realistic about their portfolio. A couple of more quarters like this and they may be done.
If they either walk or can avoid Countrywide's loan portfolio, that would be highly positive.
"If they either walk or can avoid Countrywide's loan portfolio, that would be highly positive."
Right. If they really want the POS, can't they get it after it's in receivership, in Q4?
I see the stock is down a half buck and it is being blamed for the dollar weakening against the euro and the market being down.
I think they will have a good year if they can earn their dividend. I recall that they have some convertible bonds @ 50 and the CW thing hanging over them. Tier 1 capital ratio up (slightly).
"Didn't Buffett buy some BofA a way back?"
I thought he had but according to the the 2007 report it doesn't show up so either he sold it or it's so small that it's in the "other" bucket.
Berkshire does own 9.2% of Wells Fargo and 4.4% of U.S.Bancorp.
If you "bad" consumers would just pay your bills then WE would be fine....
and we're not at all worried about the crap percolating in our balance sheet..
Said the translation....
Ciao
MS
They will not walk from CFC. They purchased them for the mortgage business platforms and servicing. Both of which they have failed at miserably in the past. BTW CNBC just announce that the do NOT plan to cut dividend but expect further losses.
"We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices," Chief Executive Kenneth D. Lewis said ...
I'm not as concerned as Mr. Lewis. You see, I firmly believe that Bubbles Ben will open the discount window to any consumer who has taken on too much debt and finds himself in a liquidity crisis.
If the embarrassment of going to the Fed's discount window is too much to bear (you know how the neighbors will talk...), BB will then open the Term Consumer Lending Auction Facility (TCLAF) that will allow consumers to purchase treasuries in order to swap with their creditors for the amount of outrageous credit card, subprime, and car loan debt that they have for up to 90 days until they can resolve their liquidity crisis.
Upshot is that consumer spending is likely to fall off a good deal more than what is currently being "priced into the market".
In the end incomes do matter... Wages always trump credit down in Sixpackville, USA.
It appears B52 is painted into a corner.
Raise rates, kill the financial system.
Lower rates and kill j6p.