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    BA Default Rate

    October 16, 2009

    Bank of America Corp posted a $1 billion quarterly loss on Friday as consumer credit woes eclipsed investment banking earnings, underlining why the bank remains on a government respirator.

    The nation's largest bank received two taxpayer bailouts totaling $45 billion after acquiring broker Merrill Lynch & Co and mortgage lender Countrywide Financial Corp at the height of the financial crisis last year. It says it wants to start repaying the money but has not yet done so.

    Bank of America's results further dampened the euphoria kicked off by JPMorgan Chase & Co's JPM.N stellar earnings report on Wednesday and indicated a steep climb ahead for banks before they can declare the worst of the financial crisis is over.

    "Investors are getting reminded that we have a ways to go to get through the credit cycle," said John McDonald, an analyst at Sanford C Bernstein in New York. "There's still much room for improvement."

    Credit losses on its consumer loans are eating into Bank of America's results as it tries to raise capital. It suffered $9.6 billion in credit losses in the third quarter, up from $4.4 billion a year earlier.

    "Bank of America is not going to fail. It's eventually going to turn this around -- but it will take time," said Gary Townsend, chief executive of asset manager Hill-Townsend Capital.

    In an ironic twist, Merrill's investment banking operations -- where massive losses in the 2008 fourth quarter triggered strong criticism of Chief Executive Kenneth Lewis -- injected a shot of adrenaline into Bank of America's results. The unit produced $2.2 billion in profits.

    Lewis, 62, has said he will retire at the end of the year. He faces multiple investigations into whether he disclosed enough information to shareholders before they approved the Merrill acquisition.

    "Forty years with the same company and eight years as the CEO is enough," Lewis said on the bank's earnings conference call. A board committee is currently searching for a successor.

    Charlotte, North Carolina-based Bank of America reported a net loss of $1 billion, or 26 cents per share, for the third quarter, compared with net income of $1.18 billion, or 15 cents per share, in the same period last year. Analysts on average expected a loss of 21 cents per share, according to Thomson Reuters I/B/E/S.

    The bank's shares slid as much as 5.7 percent to $17.06 in morning trading before recovering to $17.37 in afternoon trade, down 4 percent. The shares are off more than 20 percent over the past 12 months.

    CREDIT WORRIES

    The bank set aside $11.7 billion during the third quarter for credit losses, $1.7 billion less than in the second quarter but $5.3 billion more than in the third quarter of 2008.

    Losses from home equity loans and residential and commercial mortgages soared, but the business hit hardest was the credit card unit. The unit's chargeoff rate -- the proportion of loans it does not expect to be repaid -- is the highest in the nation at 14.25 percent.

    Like rival JPMorgan, Bank of America said that while loan-loss reserves and credit losses are still high, the rate of increase is slowing. "We believe we may have peaked in total credit losses this quarter," Lewis said.

    At the request of the Obama administration's "pay czar," Lewis will not receive any compensation for 2009. But he may receive pension benefits and accrued and deferred stock compensation totaling $125 million on retirement, according to an analysis by compensation consultants James F. Reda & Associates.

    Guessing who stands in line to succeed Lewis has become a popular parlor game on Wall Street. Bank of America has said it is considering six internal candidates: global wealth management president Sallie Krawcheck, consumer banking chief Brian Moynihan, global markets and banking president Tom Montag, home loans head Barbara Desoer, Chief Financial Officer Joe Price, and Chief Risk Officer Greg Curl.

    Shareholders have urged that external candidates be considered, and sources have told Reuters the bank is considering hiring an interim CEO to lead the bank for several years.

    "They need to be able to come out with something in the next month," said Nancy Bush, analyst at NAB Research. "It's just very important that this company be able to move forward."

    Bank of America's total assets slipped to $2.251 trillion in the third quarter, down about $3 billion from the second quarter.

    JPMorgan on Wednesday reported a $3.6 billion third-quarter profit and said its assets grew by $15 billion in the period, to $2.041 trillion. (ID:nN13183184) Like Bank of America, JPMorgan posted a big gain from banking, while Citigroup Inc, the third-largest U.S. bank, on Thursday reported its third-quarter securities and banking revenue fell by a third from a year earlier. (ID:nN15291217)

    Bank of America has been battling to raise capital to meet an expected rise in capital requirements and to help persuade the government that it is strong enough to repay some of the bailout money. It agreed last month to sell the long-term assets of its Columbia Management business to Ameriprise Financial Inc for about $1 billion.

    "We are ... doing everything we can" to repay the bailout funds, Lewis told analysts. He said the bank was waiting for government guidance on repayment criteria.

    The bank paid $893 million in dividends on the government's Troubled Asset Relief Program investment in the third quarter. "They need to start disentangling themselves from TARP," said Bush.

    Source:
    Yahoo Finance
    (Reporting by Joe Rauch and Elinor Comlay, additional reporting by Dan Wilchins)


    _____________________

    14+%!!! That's about 1 in 7. OUCH! OUCH! OUCH!
    Last edited by Flamingo; 11-03-2009, 03:18 AM. Reason: To conform with Forum Posting Rules - OP PLEASE NOTE!!!

    #2
    My goodness. I have actually posted 1500 posts? I need to get a life.

    Comment


      #3
      Originally posted by treehugger1 View Post
      My goodness. I have actually posted 1500 posts? I need to get a life.


      You have a life. bkforum vets are far more informed then non bkforum people.

      When life hits us all like a ton of bricks some bkforum members will be better prepared.
      The essence of freedom is the proper limitation of Government

      Comment


        #4
        "but the business hit hardest was the credit card unit"

        Well if the stupid f@cks didn't rate jack and raise minimum payments I wouldn't be here and they would be getting a nice monthly payment from me...but NOOOO they had to jack, like their friends at Chase and Chitti so they get ZERO from me now.
        7-2-2009 Filed
        8-28-09 341 Concluded, no assets
        10-28-09 DISCHARGED/CLOSED!!!!

        Comment


          #5
          I think they gambled and lost. A few year's later we are at 10% unemployment, foreclosures at an all-time high, unemployment benefits running out, etc. $45 BILLION dollars in taxpayer money and they are worried about my $6K - $8K charge-off accounts? LOL. There are always two players at risk. Those that borrow, and those that lend money. One would hope that those who lend money and are in the top tier of banking institutions would be smarter than those who borrow (especially CC users.) Apparently this is not the case.

          The government might have best bailed out the debt for defaulted unsecured debtors, and debtors who were given mortgages when they should not have been. These debtors could have immediately put this money back into the economy, given that the majority of our economy relies upon consumer spending. The government should have bailed out folks (debtors) who "bought" into the exploding (bubble) of real estate, and took out all the second mortages and HELOCs. The world's finest and brightest financial minds gave us these. Who are we (debtors) to question the actions of the highly-educated and wiser banking folks? LMAO
          Last edited by treehugger1; 10-16-2009, 03:56 PM.

          Comment


            #6
            Originally posted by whipster1 View Post
            "but the business hit hardest was the credit card unit"

            Well if the stupid f@cks didn't rate jack and raise minimum payments I wouldn't be here and they would be getting a nice monthly payment from me...but NOOOO they had to jack, like their friends at Chase and Chitti so they get ZERO from me now.
            EXACTLY, screw them, I hope and pray they fail.

            Comment


              #7
              Originally posted by whipster1 View Post
              "but the business hit hardest was the credit card unit"

              Well if the stupid f@cks didn't rate jack and raise minimum payments I wouldn't be here and they would be getting a nice monthly payment from me...but NOOOO they had to jack, like their friends at Chase and Chitti so they get ZERO from me now.

              I think you can thank Congress for that. Apparently one of them learned that people were paying the minimum payment and not getting anywhere on their debts, so they required credit card companies to make the minimum payment higher so people would eventually pay off their debt.

              Incidentally, Bank of America is one of the more reasonable lenders when it comes to mortgage modification and bankruptcy, and I've had a credit card with them that I've been paying off for a couple years that is finally download $3000 after having peaked at $12,000, and my interest rate has never been above 9%.
              I am a Pennsylvania Eastern and Middle District Bankruptcy, FDCPA, FCRA and Foreclosure Defense attorney, information I post is based on experience in these districts. It is not legal counsel, consider it friendly counsel.

              Comment


                #8
                I'll be happy to add $15731 to their 4th quarter loss.
                Stopped Payings CC's: 8/14/2009 | Retained Attorney: 9/23/2009 | Filed CH 7: 12/7/2009 | 341 Meeting: 1/21/2010 - Complete | Discharged: 4/9/2010
                "One person pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth."

                Comment


                  #9
                  Originally posted by LimpDisc View Post
                  I'll be happy to add $15731 to their 4th quarter loss.
                  They won't even notice.
                  I am a Pennsylvania Eastern and Middle District Bankruptcy, FDCPA, FCRA and Foreclosure Defense attorney, information I post is based on experience in these districts. It is not legal counsel, consider it friendly counsel.

                  Comment


                    #10
                    Originally posted by LimpDisc View Post
                    I'll be happy to add $15731 to their 4th quarter loss.

                    As was mentioned they won't even notice.

                    Our kids and grand kids will notice when they drive on crumbling roads and bridges because tax dollars were given to the stupid banks to offset these losses instead of investing in infrastructure and more power grids.
                    The essence of freedom is the proper limitation of Government

                    Comment


                      #11
                      Originally posted by JimKutkowski View Post
                      They won't even notice.
                      I'll notice and that's all that matters.
                      Stopped Payings CC's: 8/14/2009 | Retained Attorney: 9/23/2009 | Filed CH 7: 12/7/2009 | 341 Meeting: 1/21/2010 - Complete | Discharged: 4/9/2010
                      "One person pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth."

                      Comment


                        #12
                        Originally posted by treehugger1 View Post
                        I think they gambled and lost. A few year's later we are at 10% unemployment, foreclosures at an all-time high, unemployment benefits running out, etc. $45 BILLION dollars in taxpayer money and they are worried about my $6K - $8K charge-off accounts? LOL. There are always two players at risk. Those that borrow, and those that lend money. One would hope that those who lend money and are in the top tier of banking institutions would be smarter than those who borrow (especially CC users.) Apparently this is not the case.

                        The government might have best bailed out the debt for defaulted unsecured debtors, and debtors who were given mortgages when they should not have been. These debtors could have immediately put this money back into the economy, given that the majority of our economy relies upon consumer spending. The government should have bailed out folks (debtors) who "bought" into the exploding (bubble) of real estate, and took out all the second mortages and HELOCs. The world's finest and brightest financial minds gave us these. Who are we (debtors) to question the actions of the highly-educated and wiser banking folks? LMAO
                        What about those of us who did not over-borrow on a mortgage and did not take on credit card debt? Our tax dollars are being used to bail out the banks who lent money to people who couldn't pay it back. Now you're suggesting that those who borrowed too much and used HELOCS and credit cards like an ATM should get "bailed out" by the government too? Why should my tax dollars go to those people when I borrowed responsibly? Why should those of us who didn't participate in the irresponsible lending or borrowing have to bail you out?

                        I think if you want a bail out from the government you should get one - on the same terms the banks are getting for their bail outs. The government now owns a part of those banks and the banks have to pay the money back with interest. If that sounds like a good deal to you, have at it.

                        Comment


                          #13
                          I dont think the government should be bailing anyone out. Businesses should have been left to fail. No one is bailing me out, I am going to fail, have to start over, that is how it is.

                          Also keep in mind that even while I am going bankrupt, I am still paying taxes, taxes that are going to bail out the same banks who I am filing BK on, so they get money from me after all as well.

                          The whole situation is screwed beyond belief.

                          Comment


                            #14
                            Originally posted by hereforinfo View Post
                            What about those of us who did not over-borrow on a mortgage and did not take on credit card debt? Our tax dollars are being used to bail out the banks who lent money to people who couldn't pay it back. Now you're suggesting that those who borrowed too much and used HELOCS and credit cards like an ATM should get "bailed out" by the government too? Why should my tax dollars go to those people when I borrowed responsibly? Why should those of us who didn't participate in the irresponsible lending or borrowing have to bail you out?

                            I think if you want a bail out from the government you should get one - on the same terms the banks are getting for their bail outs. The government now owns a part of those banks and the banks have to pay the money back with interest. If that sounds like a good deal to you, have at it.
                            Call your congresspersons. Venting at consumers on here is a waste of pixels.
                            Well, I did. Every one of 'em. Mostly I remember the last one. The wild finish. A guy standing on a station platform in the rain with a comical look in his face because his insides have been kicked out. -Rick

                            Comment


                              #15
                              Originally posted by wantout View Post
                              I dont think the government should be bailing anyone out. Businesses should have been left to fail. No one is bailing me out, I am going to fail, have to start over, that is how it is.

                              Also keep in mind that even while I am going bankrupt, I am still paying taxes, taxes that are going to bail out the same banks who I am filing BK on, so they get money from me after all as well.

                              The whole situation is screwed beyond belief.
                              I agree!
                              Chapter 13 filer since Feb. 2018 under a 60 months payment plan
                              Please think positive and do not give up!

                              Comment

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