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What to make of Bank of America's earnings?
Bank of America (BAC), like Citigroup (C), is suffering at the hands of the economy to a much greater extent than JPMorgan (JPM) and Goldman Sachs (GS). At the latter two, strong trading results helped power earnings, but in the case of Citi and Bank of America, strong trading results were not enough to offset consumer losses.
At Bank of America, strong investment banking results--thanks to Merrill Lynch--were still swamped. The fact that the bank paid $1.2 billion in dividends to preferred shareholders--more than half to the government--didn't help. The loss follows some big gains earlier in the year, which stoked hope, fed by executives, that the bank would soon be able to pay off its TARP liabilities. But I don't see that now.
For the big consumer banks, it's not clear that the worst is over for credit card and mortgage debts. At Bank of America, both units posted $1 billion plus losses in the quarter. This report was notable for being the last one that CEO Ken Lewis will sign off on. It was memorable.
For more:
- here's an article from CNNMoney.com
Related Articles:
Bank of America (BAC) Earnings 3Q 2009
Ken Lewis caves to pay czar
Bank of America to hand over documents
Bank of America slow on modifications?
The pain of finding a successor for Ken Lewis
Comments
By Frank Fitton | Posted 12:58pm | October 16, 2009
Any business that’s hemorrhaging this kind of money would be looking for anyway to combat it. Cutting corners or smudging the ethical grey area boundary, might seem like a perfectly reasonable option when your losing billions of dollars.
As much as I understand though, I certainly don’t condone most of what Bank of America’s been doing. I might be more understanding if this thing carries on for awhile, but this has not been an ongoing issue. For the first two quarters of this year Bank of America had big time profits. So nobody should really be crying all that much for the poor folks at Bank of America.
I know some people out there are going to be happy about these losses for Bank of America. That feeling of they got what they deserve might make you feel better in the short term, but the long term ramifications of these losses are something that’s not going to make consumers happy. Elevated risk = elevated interest rates for all of us. Honorable creditors are going to end up paying for the people that have not been able to pay their money back. So as much as it pains me to say it, I have to hope that these losses do not continue for Bank of America. They may be bastards, but we sure do need them.
Check out my blog on BofA's 3rd quarter earnings report at..... http://www.thedebtgazette.com/2009/10/bank-of-america-3rdquarter-losses/
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