ERICOPOLY

Good point. At the same time, what that says about Citigroup that was authorized to pay a small dividend and has reversed their intention to sell of their businesses? The worst parts of the stress test were the 20% decline in US real estate and the 13% unemployment. Citigroup got off really easy because they have the lightest US mortgage exposure and lightest US consumer credit exposure. They have Asian consumer exposure but under the stress test Asia still grows at like 4% or something. 4% growth is "stress". BofA's us mortgage on-balance-sheet exposure is more than 3.5x larger than Citi's.

I believe they got the heads up from regulators that you'd better raise capital quick or you'll fail our new stress test. So in a few months time they raise $5b from Buffett, sell 400m into the market, and accelerate their asset sales. This is why they went all crazy all of a sudden after assuring us in July that they could continue on their path without dilution. Just speculation, but I believe the Fed tipped off the banks a few months ahead of time. After all, the point of the stress tests is to restore market confidence in the banks, not make the banks fail and scare everyone.

Timing is key. Getting the stock to double as soon as possible so at least a portion of the gains can be sold and parlayed (hopefully) into the next double. March: Stress test results -- makes it clear to the world that another 20% real estate decline and huge jump in unemployment won't sink them April: Q1 Earnings July: Q2 Earnings By this time we should start to see a clear trend of improvement from "Project New BAC" $12 by then? They already reduced headcount by 7,000 in Q4'11. That's huge! Meanwhile if they can avoid another huge R&W reserve build they should be able to build 100bps of capital this year.

They seem to have new legislation in the works to introduce a "Foreign Accumulation Fund" that will replace the FIF. http://www.mondaq.com/australia/article.asp?articleid=125702&tw=2 The good news for me is that my Roth IRA would likely not be treated as an FIF as long as I stick to equity investments and shy from fixed income: An offshore fund that predominantly undertakes equity investments would therefore not be treated as a FAF.

They stated today that they have asked for neither a dividend nor a buyback. There is even talk of issuing $1b worth of shares to employees (in lieu of cash compensation) in order to build capital. This is disappointing. I understand building a fortress balance sheet and trying to meet the Basel III requirements as soon as possible, but they will not have another opportunity to buy back shares at these levels. I wish they would try to balance both. Huge missed opportunity in my opinion. Remember they just sold a few hundred million shares last month for less than $6. They were not exactly acting like they are ready to return idle cash. They say it was in order to retire some other things at a discount but that's pure BS. It was because they are trying to race to get their capital ratios up. The JP Morgan conference call indicated that there is a race to the top -- there were some comments made surrounding their wanting to get to fully phased in Basel III compliance sooner rather than later. It seems this is what they see as the measuring stick that separates the men from the boys. Then the Bank Of America release stated that they were "in line with peers" -- as if that's the end all and be all place to be. So I guess maybe it is. At least it's a lower risk strategy. Well, if the company won't buy more shares on your behalf perhaps you should fork over some of your own money.

They would treat an IRA account as a "Foreign Investment Fund" and tax the increase in balance as income. So, for example, if you had an IRA (or Roth IRA) with a $3m balance and the account balance increased by 10%, then you would have $300k in taxable income to report to Australia. This happens even if you do not withdraw any funds from the account! They are paranoid about abusive offshore tax shelters and don't distinguish an IRA from an offshore tax sheltering scheme.

One thing I might try is to roll my Roth IRA into a Roth 401k that has employer sponsorship: http://www.fivecentnickel.com/2010/04/28/roll-over-ira-into-401k/ Then the money would be exempt from the FIF rules. :D

Well I'm numb with shock just thinking about it right now. They won't touch a 401k because it is employer-sponsored. However I already rolled my Microsoft 401k into an IRA long ago (four years ago). That rollover makes it subject to their FIF (Foreign Investment Fund) rules. Ironically it's because I'm a citizen that I have to pay this tax -- if I were just an American staying on a temporary visa I would be immune up to 4 years. So my citizenship is standing in my way.

I just discovered a whopper of a deal breaker for me with respect to moving to Australia: 4. Will the accumulated income from your IRA be included in your taxable income as a resident of Australia? Yes. source: http://www.ato.gov.au/corporate/content.aspx?doc=/rba/content/35498.htm

Given Warren's thoughts on housing it will surprise me if he hasn't been using the past few months to add to his $5b. He commented on how BAC reminds him of his glory years with AXP, and $5b isn't big for him given his stream of incoming cash. I mean, if he leaves this position untouched during a period where he bought $10b of IBM it will show tremendous discipline. Just since he committed the $5b in August it has already been replenished with what is pouring through the door.

So if you fast forward 2 years and realize those cost savings, we start at $11.8b additional pre-tax income relative to this year. Strip out $15b worth of 2011 R&W provisions and we're at $27b extra pre-tax income relative to this year. $27b is what it takes to boost their Basel III capital ratio by 150 bps annually (until they use up the tax losses). And this $27b figure doesn't even include any other improvements (such as reduced loan losses or decline in legal expenses).

This exchange on the conference call today is interesting. Moynihan suggesting that in 8 quarters time the legacy asset servicing expenses could drop by $1.7b per quarter. So that's a savings of $6.8b annually. Add on top of that the expected $5b in cost savings from "New BAC" progress and just those two items save $11.8b annually. Edward Najarian - ISI Group: You talked about the LAS costs coming down, you know, when you broke $3.5 billion down into sort of $1.5 billion of litigation in $2 billion core. Can you give us any sense of what you think, sort of a long-term run-rate or a normalized level is for that $2 billion core? I know you're probably reluctant to talk about the timing of getting there, but when you do get there, maybe even few years away, what would be the right number to think about that $2 billion going to? Brian T. Moynihan - CEO: I think Ed, to frame that, I think about the 60 plus delinquent units and the progress we made this year and then progress we ultimately got to get to, to get to a normalized level that will take the next six to eight quarters to get through that. But when you get down to that level, the number should be more in the $300 million a quarter versus a $2 billion from the operating cost side. And so, a reasonable amount, the servicers loans even under the heightened servicing duties that will be embedded in a way you service delinquent loans going forward to that kind of number. I just again say it's going to take us time to work through that. You see the progress we've made this year, you see the flows coming in slowing because on a whole servicing portfolio and in terms of improving delinquency, and then moving the stuff through the process. So I think that's what you should be looking for, from $2 billion down to maybe $300 million a quarter type of number. EDIT: Or are those cost cuts not mutually exclusive?

They stated today that they have asked for neither a dividend nor a buyback. There is even talk of issuing $1b worth of shares to employees (in lieu of cash compensation) in order to build capital.

Reserve releases are a non-recurring factor (however of course the elevated level of loan losses will never end). Most of the gains are one-time in nature (however of course all of the litigation, R&W, and mortgage losses are perpetual).

Houses in foreclosure over 180 days are already written down to realizable liquidation value. I take it (my hope) the deal would only be for such houses (thus it costs the banks nothing).

Any guesses on how much we waste on prosecuting prostitution? How much lost tax revenue there? There are tons of countries that have legalized prostitution and the societies are perfectly fine. No crumbling morals whatsoever. Just look at Australia -- the place is a nice clean country to visit. A great place to raise a family. We just waste money left and right. Mostly right.

Then of course we spend an average of $91,700 per student between the ages of six and fifteen. Imagine how much costs we should be able to save there. That's the second highest level of spending in the OECD, yet our 15 yr old kids rank 15th in reading, 19th in math, and 14th in science. It appears that we spend about 30% more than we need to in order to be 15th ranked in spending (to match our results). And on the global playing field, the "We're No. 1" honors go to Finland, Japan and Korea - places where the football spurring deep passions is round, not oblong. Finland, Japan and Korea were the top finishers in an OECD (www.oecd.org) study that measured 265,000 15-year-olds' literacy in reading, mathematics and science (see charts accompanying this feature). U.S. fans fed up with the BCS may find little comfort in the OECD rankings. The apropos U.S. refrain would run something like, "We're No. . . . Ah, 'Bout Average, Dude, . . . Whatever." U.S. students finished 15th in reading, 19th in math and 14th in science - and in a study that only ranked 31 nations. Worse, out of 34 OECD countries, only 8 have a lower high school graduation rate. The United States' education outcomes most resemble Poland's, a nation that spends less than half on education than the U.S. http://mercatus.org/publication/k-12-spending-student-oecd http://www.siteselection.com/ssinsider/snapshot/sf011210.htm If America Spends More Than Most Countries Per Student, Then Why Are Its Schools So Bad? http://www.businessinsider.com/us-education-spending-compared-to-the-rest-of-the-developed-world-2012-1?nr_email_referer=1

Were we to match Australia in health care and defense spending, we would save $5,047 per capita. That's $1.57 Trillion! (estimated 311 million people in the US) Annually!

2009 defense figures: http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures_per_capita US: $2,141 Australia: $893 Canada: $560 Germany: $558

Good point on healthcare but as far as defense, we have peace in our homeland, or as close to peace as you can get in a country with 300 million people. There hasn't been a full war fought on American soil since the civil war. In fact this modern global era has been the most peaceful in all of human history relative to how many people there are. The brown people we bomb don't have peace, but the American people very much do. Same can be said for Mexico and Canada. And Australia/New Zealand. It helps to not be within marching distance of Germany.

Opponents claim that socialized medicine would require higher taxes but international comparisons do not support this. The ratio of public to private spending on health is lower in the U.S than that of Canada, Australia, New Zealand, Japan, or any EU country. Yet the per capita tax funding of health in those countries is already lower than that of the United States. http://en.wikipedia.org/wiki/Socialized_medicine In fact here are the health expenditures per capita for 2008: United States: $7,164 Canada: $3,867 France: $3,851 Australia: $3,365 New Zealand: $2,655 source: http://www.globalhealthfacts.org/data/topic/map.aspx?ind=66

The country is interesting. We spend the most on defense yet we don't have peace. We spend the most on health care by a massive margin yet we're not the healthiest. On March 1, 2010, billionaire investor Warren Buffett said that the high costs paid by U.S. companies for their employees’ health care put them at a competitive disadvantage. He compared the roughly 17% of GDP spent by the U.S. on health care with the 9% of GDP spent by much of the rest of the world, noted that the U.S. has fewer doctors and nurses per person, and said, “[t]hat kind of a cost, compared with the rest of the world, is like a tapeworm eating at our economic body.” The CIA World Factbook ranked the United States 41st in the world for infant mortality rate[117] and 46th for total life expectancy.[118] A study found that between 1997 and 2003, preventable deaths declined more slowly in the United States than in 18 other industrialized nations.[119] For example, the United States was listed as 37th for life expectancy and 41st in low birth weight.[120] The U.S. stands 50th in the world for a life expectancy of 78.37. Australia, the first major country on the list stands ninth with a life expectancy of 81.81. source: http://en.wikipedia.org/wiki/Health_care_in_the_United_States

Well if that happens then it really is the next Berkshire Hathaway -- the one where the cash is all paid out to shareholders and they never buy any new operations (GEICO, etc...). After all, where are those textile operations today?

And I'm sure that was their thinking with the nice images. Perosnally, when searching I care more about content than form, though. I'm not one of the people who thinks the search results of one is better than the other. So it's sort of like an elevator -- they both take me to the same destination but I prefer the one with nice pictures on the walls.

I just have an old habit from when NCSA Mosaic was my browser. You know, the free browser that Netscape copied and then tried to charge for?