ERICOPOLY

Well, I can see that I'm the reckless one of the bunch... +67.25 annualized in my wife's RothIRA from 2/28/2005 until end of November (and up another 32.6% in December). +70.41% annualized in my RothIRA from 1/31/2003 until end of November (and up another 35.7% in December)

+200% in 2012 mostly leveraged BAC, some leveraged AIG.

And me a better speculator! Happy New Year.

Only 100%?? :) It's the new normal.

I'm sure he buys on the basis of the expected forward earnings of the investment. Take a bank like WFC which is one that he is buying. Is it in an earnings bubble? Of course not.

I bet Sanjeev enjoyed the Meredith Whitney video a whole lot more.

Not sure, but there is at BAC already a 50 bps ($7.5b) buffer for legal settlements (that's $7.5b in excess of reserves). Their worst case putback estimate is: $5b from monolines above reserves $1b from GSE's above reserves

The article offers an explanation that sounds plausible: Delays are also occurring because Countrywide loans are getting scrutinized in foreclosure cases for documentation problems such as missing promissory notes and chain-of-title discrepancies, said Tony Plath, a professor of finance at the University of North Carolina in Charlotte who follows Bank of America. “Bank of America knows that whenever possible, defendants are likely to mount a judicial challenge at foreclosure hearings, so before they can initiate the foreclosure process they have to make sure the loans in question can withstand judicial challenge in court,” Plath said. “The large number of 180-day delinquencies relative to the other big servicers give a good indication of the magnitude of the problems that face BAC as it tries to clean up the Countrywide mess.”

I have no idea. I'm only using Fidelity for my RothIRA -- problem doesn't exist for me.

I also told Fidelity that I was concerned about their security. I told the man that all somebody needs to do is trick me into installing their keystroke logging software, and then they'd have my username and password for Fidelity. Once they log into my account, they use my account to bid up the prices of some illiquid penny stocks that they own (selling into my bid), and thus I'm robbed blind when the penny stock subsequently crashes a few minutes later. So he sent me a Verisign tool that hangs on my keychain. It is paired with my account and randomly generates a code that expires after 30 seconds. I'm challenged for that code after logging in with my user name and password. A third line of defence. I wasn't charged for the Verisign tool. Just had to know what to ask for :)

Well anyways, their buffer will likely be 100bps by the end of Q1, bringing them to 9.5% B3. Then if they only return $7b in 2013, they'll probably be running at over 10% B3 going into 2014. Given the stated goal of 9% (including a 50 bps) buffer, perhaps one year out in the future they could flush the 100 bps excess in a special dividend or tender offer.

You're probably right on with regulators' thinking - but isn't this what required capital ratios are supposed to be for? I think the capital ratios are probably established assuming a healthy earnings state. So basically if 8.5% is where they want a healthy bank to be maintaining during good times, they might want to pad it with additional buffer if the bank is not yet healthy (earnings wise) to begin with. How to quantify it though? Well, say that LAS is burning through 10b a year of earnings and maybe over the next two years it will be a total of 15b burned before LAS is all sorted out. Well that's comparable to a 100 bps capital buffer.

Did you eventually open an account with Wells Fargo? Any opinions on their service and execution? I've had a checking account with them since 1984. But I was trying to get them to give me a mortgage in late 2010 based on my assets. At the time, I had a lot of exposure to Wells Fargo equity and that was creating a problem -- they said something to the effect that they can't express an opinion on what their own equity is worth. But they did say that if I moved my brokerage relationship over to them they'd be happy to put a mortgage together for me. Fast forward to today, and now I have too much exposure to BAC. I'd rather be with Merrill Edge if it comes down to needing to moving my RothIRA assets in order to get a mortgage, but I'll be hit with the same problem. BofA will probably tell me that they can't express an opinion on the value of their stock. However hopefully the size of the RothIRA will allow them to want to estabish the relationship anyway despite it not being based on an asset valuation. Merrill would be the best for me as they have an office a 1/3 mile walk down the road for me. Very convenient.

I believe Moynihan is saying that all of the additional capital generation will be returned. However what he didn't say is that there may be a lag between when it comes in and when it gets returned. That lag would be the period in which they are not at their full regular earnings power, due to this LAS stuff. They can use it to fill sandbags until LAS normalizes , and then they can get the greenlight to empty the sandbags. I believe Buffett looks at Wells Fargo as the best capitalized bank because the earnings are so strong that when losses mount they can build their loan loss reserves while still building capital. Were this to be a canal, Wells Fargo's canal is very deep and so can better handle a flood. Bank of America's canal right now is nowhere near as deep, so they have to build the walls up higher with sandbags. Over the next couple of years the canal (BAC's) will be dredged so that it can handle more water without the need for additional sandbags.

This is true but for headline/reputational reasons Moynihan has already stated that nobody wants to be denied on that first request. So they're not going to test the limit.

I hope this doesn't mean the fed is going to keep the buybacks/dividends at much lower levels than other banks for another year, to "prove" the consistent earnings. Probably a tighter leash than WFC or JPM, but they'll be allowed to return capital. JPM has to actually raise capital to reach the buffer levels, whereas BAC is already well above. So assume both companies will have to use significant amounts of cash flow for non-dividend, non-buyback issues...BAC (litigation and loan losses)...JPM (raising capital levels). Moynihan is just stating that the bulk of the capital return won't happen until almost all of the legacy issues are behind them. But there is enough behind them now, with settlement precedents set, where they will be able to return more capital regardless. Cheers! I hope everyone is right, but it wouldn't surprise me if they are kept on a very tight leash. The problem with spigots is once you turn them on, you can't get the water back. But if you keep it in the off position you can let it build. Regulators are not known necessarily for their creative thinking. Jobs are lost not when they are "generous" but when they change course and something bad happens. I do hope for the best though. From the Fed's point of view, if the economy goes south and banks have to build huge loss reserves, the only thing this can come from is earnings power. So if your earnings generation machine is only working at 1/2 of capacity, the Fed might ask you to stack more sandbags (which can be converted to loss reserves in a pinch). So I'm starting to join the boat of analysts who are expecting a relatively light capital return for 2013.

Am I the only one that hasn't sold anything yet?

There's an embedded video of her pumping the stock at the bottom of the story: http://www.bizjournals.com/charlotte/blog/bank_notes/2012/12/meredith-whitney-helps-fuel-bank-of.html?ana=yfcpc

Just mulitply today's closing price by 18.7% and you'll get roughly the Q3 tangible book of $13.48.

I called them up a couple of weeks ago asking if they'd offer me a home loan (I knew ahead of time that they don't offer these). Then I explained how I could only get a mortgage through Wells Fargo if I moved my brokerage relationship to them. The Fidelity guy immediately started offering $5 commissions and asking what else he could do.

WSJ ran an article recently called: The Power of Negative Thinking. It makes you happy! http://online.wsj.com/article/SB10001424127887324705104578147333270637790.html?KEYWORDS=negative+thinking

I think that makes sense. Money is created when new credit (debt) arises. Over the past year or so BofA personally destroyed $100b worth of money by letting the LT debt roll off their books without replacement. That was deflationary. The Fed can then purchase $100b of MBS and it's a wash. Unless BofA starts expanding it's lending again... but as you suggested that doesn't happen until the economy booms. So the Fed perhaps is just replacing the evaporating money rather than creating a flood of new money. The inflation occurred in the past during the credit boom -- now the Fed is just propping it up rather than letting the inflation unwind.

You just watch. Sanjeev will adjust his price target higher once it hits $12. A budding analyst career awaits him!

Up roughly 4% on just normal daily volume.

+millions ;D