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’Goldman: this is not 2008
US financials are melting on Monday:
As at pixel time, we’re facing a broad-based sell-off but the banks are among the hardest hit.
However, Goldman Sachs, appropriately enough, reckons this will be a short-term soft patch.
Will the last person to sue BofA please turn out the lights
Everyone’s favourite bank was again the S&P 500′s worst performer at pixel time:
AIG (and thus the taxpayer) are trying to recover $10bn, reports Reuters.
Meanwhile, in Bank of America news
Sure, it’s been a bad year but there must be a reason why BofA is the biggest Friday faller (down 8 per cent) on the DJA and S&P.
It’s because BofA’s 10-Q reveals the bank underestimated the cost of those dastardly GSE settlements.
US financials still lagging
US stocks are up slightly today, and the rally is happening entirely in the so-called “real” economy.
As per the norm since earnings season kicked off last week, financials are underperforming — here’s a look at the S&P vs the KBW bank index:
Bank of America’s settlement
Remember those blemished Countrywide loans and the pointed letter from RMBS investors that Bank of America received last October?
The bondholders had alleged that Countrywide had failed to meet certain underwriting standards for the loans included in these RMBS deals and had improperly serviced the loans,
The karmic feel-good story of the weekend
Bank of America improperly forecloses on homeowners. Homeowners foreclose back:
Credit rating cliff risk, redux
And the slow drain of financial crisis support from formerly ‘TBTF’ banks continues apace.
On Thursday, Moody’s announced it would be putting the credit ratings of Bank of America, Citigroup and Wells Fargo on review for downgrade after taking a closer look at incoming financial reform:
Snap news
Breaking pre-market news on Wednesday,
- Bank of America to spin off private equity unit – FT.
- Bank of England minutes unlikely to show shift towards rate hike – Reuters.
- RBS to restructure investment banking team,
Rocky Balboa
FT Alphaville was all set to work through the early morning examining the release of allegedly damning documents relating to the actions of Bank of America Merrill Lynch or its subsidiaries in the ongoing struggle to provide settlements in the foreclosure crisis.
Mirror, mirror on the wall — who’s really the riskiest of them all?
This — in case you were wondering — is a list of what some academics see as today’s most systemically risky financial firms in the US:
The list has been compiled on VoxEu.org by Viral Acharya,
A slow, speedy death for BofA’s conduits
Bye, bye Bank of America commercial paper conduits. We knew you well.
From Asset-Backed Alert:
Bank of America is officially out of the business of running commercial-paper conduits.
The Charlotte bank paid off all of its outstanding conduit paper within the last week or two,
Chart du jour, BofA edition
Bank of America shares since yesterday morning against both the S&P 500 and the KBW bank index:
You already know why.
As Reuters explains, the deal cut with the GSEs is separate from BofA’s ongoing negotiations with private investors and the monolines,
Assange backed (in)securities [update]
Until now the Wikileaks swag bag has included little of immediate interest to finance buffs (German reaction to GM’s decision not to sell Opel, anyone?).
But Clusterstock today picked up on a 2009 Computer World interview with wikileaks founder Julian Assange:
That mysterious missing mortgage note
Whoops. Securitisation snafu straight ahead.
The New York Times picked up on small court case — with big implications — over the weekend. According to testimony by a Bank of America executive, and presented as part of a New Jersey bankruptcy judge’s opinion,
BofA sheds awkwardness along with BLK shares
When Bank of America received a much-hyped letter from bondholders two weeks ago, we didn’t say much (though others did) about how awkward it was for the bank ostensibly to be facing the threat of legal action from one of its own holdings.
Deutsche Bank on the perfect mortgage company
Foreclosure fraud! Robosigning! Repurchases!
How, as Mike Konczal noted a couple weeks ago, did mortgage servicers get it so wrong?
To answer the question it’s worth taking a look at a certain mortgage firm that may have got it right.
Turn of the (MBS) trustees
Bank of New York Mellon may have been the other addressee in that Pimco, New York Fed, BlackRock et al letter regarding $47bn in RMBS — but it’s managed to escape much of the limelight shining on co-addressee Bank of America.
Those blemished Countrywide credit loans
So… since FT Alphaville was working on a special RMBS supplement;
We spoke with Scott Simon, head of MBS at Pimco last week — who gave us this quote:
“There’s been an amazing amount of things
Bondholders vs BofA, continued
Just a few additional items we’d like to record that might shed some light on the still-developing story that MBS investors were pressuring BofA to repurchase mortgages the bank had sold them.
First,
BlackRock, Pimco, NY Fed coming after BofA, Bloomberg says
No sooner does Bank of America announce earnings than it gets hit with a significant threat of legal action from mortgage bond holders – including the New York Fed. From Bloomberg:
Pacific Investment Management Co.,
Mortgage multiplicity
Naked Capitalism — which has been producing boatloads on the mortgage mess — has something interesting. It’s a court filing made by Bank of America back in June.
Quick background — the filing has to do with Ocala Funding LLC,
Bank of America posts Q3 adjusted net profit of $3.1bn
Part three of your third-quarter US bank earnings season is out.
On Tuesday, Bank of America announced a net loss of $7.3bn for Q3 2010, including a goodwill impairment charge on its card services biz of $10.4bn.
From foreclosure to writedowns
Foreclosure worries are now (finally) seeping into bank shares and credit.
Four US financials — Bank of America, JP Morgan Chase, GMac/Ally, PNC — have halted foreclosures in all or some US states while they sort out technical deficiencies in their paperwork process.
RepoCDSed
Fears of an extended foreclosure crisis put sizeable pressure on US bank spreads.
WFC five-year CDS is at 128bps (+10) according to Markit prices, Citi at 175bps (+11), and JPM at 96bps (+7). BAC is up 18bps to 197bps — its widest level since July 2009.
Banks’ buyback pain to be $17bn – $42bn, Fitch estimates
While the Firm uses the best information available to it in estimating its repurchase liability, the estimation process is inherently uncertain and requires the application of judgment.
- JP Morgan’s Q2 10-Q filing.
The $11.1bn buyback pain at BAC
A sharp-eyed spot over at American Banker.
They’ve noticed this little section from Bank of America’s recently filed second-quarter 10-Q:
Although the timing and volume has varied, repurchase and similar requests have increased from buyers and insurers including monolines.
Bank of America beats with EPS of $0.27
And the beat goes on in US earnings season. Bank of America announced Q2 earnings of $3.1bn on Friday, translating to an EPS of 27 cents a share versus estimates of 23 cents.
More flashes, via Reuters: