ERICOPOLY

Actually, the $5b estimate is for non-GSE claims. The vast majority of the repurchase requests are from the GSEs -- the percentage is stated on page 34 of the 4Q11 earnings presentation. From the 4Q11 earnings presentatio, page 34 "Estimated range of possible loss related to non-GSE representations and warranties exposure could be up to $5B over existing accruals at December 31, 2011"

Except that Wells Fargo only needs a 1% SIFI buffer, whereas BofA needs a 2% buffer. That may change over time, but I think that's what is understood today.

I think I overstated the necessary tangible book per share and therefore understated the return on retained earnings. I think it's more like $16 per share and 16.25% return on retained earnings.

I believe tangible book per share will be somewhere around $18 to support those $2.60 in per share earnings -- this is when they are exceeding 9% Tier 1 capital ratio under fully phased in Basel III. 2.60 / 18 = 14.44% So the return on reinvested capital would be 14.44%. But I don't think they can reinvest 50% of their earnings -- where will the growth opportunities come from? Or am I incorrect about that $18 per-share figure (using 11b share count). I guess I'm using TCE of 9% as a proxy for Basel III of 9% (plus some cushion assuming TCE is more rigorous ratio than Basel III). I believe Moynihan said about $18 billion of capital for every 100 bps of Basel III. So with an 11 billion share count and a 9% target ratio the math is pretty easy -- about $18 per share.

Moynihan just told us last week that $35b-$40b pre-tax income is still doable in a normal environment (normal Fed interest rates, GDP growth of 3%, and planned cost cuts in place). So $2.60 per share is possible if 11b shares and tax rate of 28%. So a reason to hold the stock longer term is perhaps to wait to sell it into a stronger economy when full earnings power is realized. He fields a question about it at the 21:30 mark (replay on BofA website). I can't make it work with these calculations. $2.6 per share at 11b shares is $28.6b of net income. EBT is then $39.7b assuming a 28% tax rate, which implies nothing for loan loss reserves since ptpp is 35 to 40. Perhaps the $2.6 eps assumes a tax shelter? Even if so, 2.6 is not sustainable earnings usable for valuation purposes. It's 35-40 of "income" before tax but AFTER provisioning for losses.

I get about 1/2 that amount. I am thinking about $5b a year is the per-annum repurchase risk. The calculation: 1) $5b of repurchase requests per quarter (higher rate than last year) -- for $20b per year 2) 80% repurchase rate (same rate as AGO settlement) 3) 30% loss rate $20b*.80*.30 = $4.8b

Moynihan just told us last week that $35b-$40b pre-tax income is still doable in a normal environment (normal Fed interest rates, GDP growth of 3%, and planned cost cuts in place). So $2.60 per share is possible if 11b shares and tax rate of 28%. So a reason to hold the stock longer term is perhaps to wait to sell it into a stronger economy when full earnings power is realized. He fields a question about it at the 21:30 mark (replay on BofA website).

I reason the dilemma would be the same. You have high ROE at KO but don't expect much in annual returns holding it. Reason: the stock valuation is adjusted for the higher ROE and much of the earnings are not retained.

I love the math. We get another 62.5% rise in the stock by FYE 2012 to take us to $13. Then from $13 we get yet another 20% annualized for two years to get to that $19 number.

I would be very very happy with that outcome. Anyone paying $13 per share today would make 15% annualized until FYE 2014 under that scenario.

I agree with that statement but the head-scratcher here is that another 12 months have passed -- in other words, if you look at the outstanding risk last year vs this year, it must have come down a whole lot just due to tacking on 12 months of additional payments to so many loans. And so whatever estimates management have right now of their reserve adequacy is that much more accurate.

The loan loss reserve is as large as 2.1x annualized losses. Where do the doubts come from?

On the topic, Citigroup's presentation has a comparison of total debts and their composition by sector. page 8: http://www.citigroup.com/citi/fin/data/p120307a.pdf?ieNocache=853 Shows that from 2000 to Q2 2011, total debt in Canada grew by 25% whereas it grew by 27% in the US. Not a big difference. resulting in total debt: Canada 276% of GDP US 279% of GDP

The referee is blowing the whistle on this one: double-drivelling.

Page 13 shows that the "cost per dollar deposit" is 2.55%, even though they only pay the depositor 0.23% yield on the deposit.

It's not against the law to drink alcohol so therefore you should get a tax refund every time we prosecute a drunk driver?

Currently you are paying extra taxes to lockup the drug users, the prostitutes, the johns, and there might even be the odd dollar wasted on prosecuting polygamy.

People can believe what they want to. You are free to believe in talking snakes, people rising from the dead, golden tablets ascending to heaven... whatever floats your boat. You can even believe that marriage is strictly between a man and a woman. Just don't force others into your belief system! That's when you are taking away freedom. Does this mean you would vote in favor of allowing polygamy? If not, why? I don't need an answer I am just noting that your philosophy, if consistent, would have to say yes to polygamy, prostitution, drug legalization, etc. They are all consenting adults. I would vote in favor of legalizing polygamy. I would vote in favor of legalizing prostitution. I would vote to decriminalize drug use.

People can believe what they want to. You are free to believe in talking snakes, people rising from the dead, golden tablets ascending to heaven... whatever floats your boat. You can even believe that marriage is strictly between a man and a woman. Just don't force others into your belief system! That's when you are taking away freedom. Stop taking away his freedom to take away other people's freedom! This is religous opression! ;D I can't help myself as I feel a surge of power after taking away his right to teach creation in public schools. There is no stopping me now.

People can believe what they want to. You are free to believe in talking snakes, people rising from the dead, golden tablets ascending to heaven... whatever floats your boat. You can even believe that marriage is strictly between a man and a woman. Just don't force others into your belief system! That's when you are taking away freedom.

LOL! I am intolerant of the intolerant.

http://en.wikipedia.org/wiki/Age_of_consent A small number of Italian and German states introduced an age of consent in the 16th century, setting it at 12 years. Towards the end of the 18th century, other European countries also began to enact age of consent laws. The first French Constitution established an age of consent of 11 years in 1791, which was raised to 13 in 1863. Portugal, Spain, Denmark and the Swiss cantons, initially set the age of consent at 10–12 years and then raised it to between 13 and 16 years in the second half of the 19th century.[5] Historically, the English common law set the age of consent to range from 10 to 12.[6] In the United States, by the 1880s, most states set the age of consent at 10-12, and in one state, Delaware, the age of consent was only 7. A New York Times article states that it was still aged 7 in Delaware in 1895.

That is an opinion. Which he is completely entitled to. His opinions are entirely his business right up until the point where he wants to use the violence of the state to enforce them on others. No one is trying to force homosexual marriage on him. If Sanatorium wants to not marry another man everyone is fine with that. When he wants to tell other people who they are "allowed" to marry themselves (i.e. use government force to enforce his personal preferences on others) that's were the problem is. I joke that divorce is more of a threat to marriage, but he isn't against that.

It is hate though. It's bigotry, it's intolerance. Perhaps it is codified in his religion, wouldn't surprise me.

Read it for yourself: http://www.huffingtonpost.com/2012/01/01/rick-santorum-would-invalidate-gay-marriages_n_1178450.html http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/02/BA3Q1N9EV9.DTL In my state it's legal to take a child bride if the parents approve. Should it also be legal to consumate a homosexual marriage to a child if the parents approve? Personally, I think what this all boils down to is companies don't want to have to pay spousal benefits. So they back candidates that will keep their costs down. Just like "banning the EPA" and other tricks to lower the cost of doing business.