nkp007 Posted June 19, 2012 Share Posted June 19, 2012 FHFA Seeks to Limit Buybacks Afflicting BofA to PNC: Mortgages http://www.bloomberg.com/news/2012-06-19/fhfa-seeks-to-limit-buybacks-afflicting-bofa-to-pnc-mortgages.html WOW :o Link to comment Share on other sites More sharing options...
Guest hellsten Posted June 29, 2012 Share Posted June 29, 2012 ValueXVail 2012 presentation on BAC by Kai Shih: http://www.scribd.com/doc/98208590/ValueXVail-2012-Kai-Shih Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 29, 2012 Share Posted June 29, 2012 ValueXVail 2012 presentation on BAC by Kai Shih: http://www.scribd.com/doc/98208590/ValueXVail-2012-Kai-Shih A good summary. So he is estimating $22 billion in total but looks a little optimistic for a worst case scenario (I think we have been talking around $40 billion for a worst case?). For example, you can not use previous settlements to estimate the costs of a trial that is reaching a conclusion and most def looks like they will lose it. But what raises a big flag in the analysis, is that there is a large potential weakness in the private investors bucket if the article 77 tactic falls down. He does not even include the risk of New York litigation in his worst case because it is "hard to win", while also failing to mention that there has been some creative interpretation of what constitutes New York-based. So it looks more like a base case scenario to me. A base case that is not too bad considering the 16 billion already reserved plus some more undisclosed reserves. On the positive side, I am wondering why he does not mention that BAC could still use Chapter 11 for Countrywide and how they could use delay tactics and cash flow to even further increase litigation reserves. Also, he does not mention positive developments like the settlement for peanuts of the Merrill Lynch acquisition lawsuit. Link to comment Share on other sites More sharing options...
Grenville Posted June 29, 2012 Share Posted June 29, 2012 ValueXVail 2012 presentation on BAC by Kai Shih: http://www.scribd.com/doc/98208590/ValueXVail-2012-Kai-Shih A good summary. So he is estimating $22 billion in total, and that is not that far from what we've been discussing, but it is a little optimistic for a worse case scenario. You can not use previous settlements to estimate the costs of a trial that is reaching a conclusion and most def looks like they will lose it. But what raises a big flag in the analysis, is that there is a large potential weakness in the private investors bucket if the article 77 tactic falls down. He also does not even include the risk of New York litigation in his worse case because it is "hard to win", while also falling to mention that there has been some creative interpretation of what constitutes New York-based. So it looks more like a base case scenario to me. A base case that is not too bad considering the 16 billion already reserved plus some more undisclosed reserves. Also, on the positive side, I am wondering why he does not mention that BAC could still use Chapter 11 for Countrywide and how they could use delay tactics and cash flow to even further increase litigation reserves. Plan, I agree with you, his worst case assumptions are a little weak for the reasons you outlined. The progress on the litigation front is worrisome in the worst case scenario. The bankruptcy option with Countrywide and the liquidity issues at MBIA provide positives to the eventual outcome on the litigation front. The mortgage litigation is the most worrisome aspect of investing in BAC for me. I do have a position in BAC. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 29, 2012 Share Posted June 29, 2012 http://www.law360.com/newyork/articles/354630/judge-ticked-over-delays-in-mbia-suit-against-bofa A New York state judge told attorneys Wednesday she was “ticked” and vowed to ensure that a multibillion-dollar lawsuit over MBIA Inc.-insured securitized mortgages from a Bank of America Corp. affiliate goes to trial "if it's the last thing I do." Judge Eileen Bransten berated counsel for both BofA and Countrywide Financial Corp. during the hearing in downtown Manhattan, saying she wouldn't accept any more eleventh-hour document productions or changes to the discovery schedule Link to comment Share on other sites More sharing options...
kevin4u2 Posted June 29, 2012 Share Posted June 29, 2012 Some good news for B of A shareholders. http://newsandinsight.thomsonreuters.com/Legal/News/2012/06_-_June/NY_appeals_court_gives_big_boost_to_BofA_in_MBS_put-back_suits/ Link to comment Share on other sites More sharing options...
xazp Posted June 30, 2012 Share Posted June 30, 2012 I'm the author of the presentation, and I'm glad to see some discussion around it. To the general question of why didn't I mention 'X,' the reason is I was given 15 minutes to present - it just wasn't enough time to fully discuss a complex topic like BAC. With respect to a potential rejection of the $8.5Bn settlement, I do not share your view that total costs would go up. To me, the best document on this topic is the Gibbs & Brun 10/31 filing on behalf of the 'big investors' - the PIMCO/Blackrock/etc group. This is a quote from their document - these are the would-be plaintiffs. There are 530 trusts in the settlement... The institutional investors hold 25% of the voting rights in 189 of these trusts. In all but two of the remaining 341 trusts no group alleges they hold 25% of the voting rights. If the settlement is disapproved these trusts will receive no remedy at all. Because of the 25% bondholder threshold, about 65% of the trusts can't even enter litigation. In other words, while the $8.5Bn settlement meets or exceeds the "big investor's" expected value for returns via litigation - everyone involved in trusts outside of what they've hit 25%, is basically going to receive zero. The reason Gibbs & Brun is pushing so hard for the settlement is their investors hold $14Bn of securities in trust where they haven't been able to get the 25% threshold - and those trusts will receive nothing. And as suggested in my presentation, the alternate path through securities act litigation slammed shut long ago. Link to comment Share on other sites More sharing options...
Liberty Posted June 30, 2012 Share Posted June 30, 2012 Welcome to the board, xazp. Hope you enjoy your stay :) Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 30, 2012 Share Posted June 30, 2012 Welcome to the board Kai and thanks for the interesting reply. Will throw some comments on Monday. BTW, this is the document that Kai is referencing: http://www.cwrmbssettlement.com/docs/No.%20124%20Institutional%20Investors_%20Statemetnt%20in%20Support%20of%20Settlement%20and%20Consolidated%20Response%20to%20Se.PDF Link to comment Share on other sites More sharing options...
Grenville Posted June 30, 2012 Share Posted June 30, 2012 Welcome to the board Kai and thanks for the interesting reply. Will throw some comments on Monday. BTW, this is the document that Kai is referencing: http://www.cwrmbssettlement.com/docs/No.%20124%20Institutional%20Investors_%20Statemetnt%20in%20Support%20of%20Settlement%20and%20Consolidated%20Response%20to%20Se.PDF Thanks for the link to the document referenced. Also thanks for the response xazp. Link to comment Share on other sites More sharing options...
Grenville Posted June 30, 2012 Share Posted June 30, 2012 Because of the 25% bondholder threshold, about 65% of the trusts can't even enter litigation. In other words, while the $8.5Bn settlement meets or exceeds the "big investor's" expected value for returns via litigation - everyone involved in trusts outside of what they've hit 25%, is basically going to receive zero. The reason Gibbs & Brun is pushing so hard for the settlement is their investors hold $14Bn of securities in trust where they haven't been able to get the 25% threshold - and those trusts will receive nothing. And as suggested in my presentation, the alternate path through securities act litigation slammed shut long ago. My response here is a response to a potential worst case scenario: Allison Frankel provides one avenue through which individual note holders could bring suits: Either way, if the judge finds BNY Mellon was conflicted because of indemnity agreements with Countrywide or Bank of America, it's conceivable that investors could bring their own breach of contract suits. This is from the earlier linked article from Friday. This development along with a potential adverse ruling in the MBIA successor liability suit against BAC could open the door for a higher payout. Part of the willingness for the settlement is the idea that the Countrywide liabilities are ring fenced as outlined in Daines opinion on corporate separateness. There are a lot of pieces that would need to occur for this worst case to play out, but I think it's important to be aware of this risk even if it's a very low probability. Link to comment Share on other sites More sharing options...
Grenville Posted June 30, 2012 Share Posted June 30, 2012 I had a question regarding BAC's CDS exposure to Monolines. Does anyone know how much of the notional exposure is to MBIA and if they've specified this anywhere in the CC or presentations? The items are referenced in the 10K on page 51: Collateralized Debt Obligation and Monoline Exposure Link to comment Share on other sites More sharing options...
xazp Posted June 30, 2012 Share Posted June 30, 2012 Either way, if the judge finds BNY Mellon was conflicted because of indemnity agreements with Countrywide or Bank of America, it's conceivable that investors could bring their own breach of contract suits. Time is in BAC's favor - both due to statute of limitations and the time value of money. If someone decided to sue for breach of contract today, they'd be suing on securities that were issued 5-8 years ago, and the clock keeps ticking. I think only one party (Walnut Place) has even tried in the last 8 years. Good luck with starting now, given the statute of limitations. The vast majority of securities holders have never sued (my guess: holders of 90%+ of face have never sued) and I don't see them suddenly getting interested today. On the topic of successor liability, I think the Supreme Court's Janus ruling (http://bucks.blogs.nytimes.com/2011/06/13/supreme-court-ruling-in-janus-case-limits-shareholder-suits/) tells you the ultimate outcome of successor liability. Also see judge pfaelzer's directly applicable series of rulings on successor liability. I believe that BAC is buying some of the Countrywide securities via those Maiden Lane auctions they keep winning. Maiden Lane was part of the Gibbs & Brun group - it's a nice way to derisk, and possibly, they've pushed some trusts under the 25% threshold that way. Link to comment Share on other sites More sharing options...
MrB Posted July 10, 2012 Share Posted July 10, 2012 Poor customer satisfaction; BAC no 15 on the list Learning from the losers http://www.propertycasualty360.com/2012/07/06/learning-from-the-losers?utm_source=PC360DailyeNews&utm_medium=eNL&utm_campaign=PC360_eNLs more detail from the source http://www.theacsi.org/index.php?option=com_content&view=article&id=147&catid=14&Itemid=212&i=Banks Link to comment Share on other sites More sharing options...
Parsad Posted July 10, 2012 Share Posted July 10, 2012 New article on BAC: http://finance.yahoo.com/news/bofa-cutting-commercial-banking-jobs-220341983.html Cheers! Link to comment Share on other sites More sharing options...
obtuse_investor Posted July 11, 2012 Share Posted July 11, 2012 BAC publishes bank resolution plan From the Federal Reserve's Press Release: http://www.federalreserve.gov/bankinforeg/resolution-plans.htm The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve submit resolution plans annually to the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). Each plan must describe the company's strategy for rapid and orderly resolution under the Bankruptcy Code in the event of material financial distress or failure of the company. Bank of America's Resolution Report: http://www.federalreserve.gov/bankinforeg/bank-of-america-20120703.pdf Link to comment Share on other sites More sharing options...
beerbaron Posted July 11, 2012 Share Posted July 11, 2012 BAC publishes bank resolution plan From the Federal Reserve's Press Release: http://www.federalreserve.gov/bankinforeg/resolution-plans.htm The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve submit resolution plans annually to the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). Each plan must describe the company's strategy for rapid and orderly resolution under the Bankruptcy Code in the event of material financial distress or failure of the company. Bank of America's Resolution Report: http://www.federalreserve.gov/bankinforeg/bank-of-america-20120703.pdf Anybody else thinks it's like a Mini 10-K, not really a will... BeerBaron Link to comment Share on other sites More sharing options...
fareastwarriors Posted July 11, 2012 Share Posted July 11, 2012 http://www.bloomberg.com/news/2012-07-11/bofa-give-away-has-few-takers-among-homeowners-mortgages.html When Bank of America Corp. sent letters to 60,000 struggling homeowners offering to slice an average $150,000 off their loans, the lender got an unusual response from most of them: silence. Link to comment Share on other sites More sharing options...
Olmsted Posted July 17, 2012 Share Posted July 17, 2012 http://in.reuters.com/article/2012/07/17/bankofamerica-countrywide-syncora-idINL2E8IHG7J20120717 BAC settles with Syncora. No further details yet. It will be interesting to see what the settlement was - perhaps could help us handicap MBIA? Link to comment Share on other sites More sharing options...
goldfinger Posted July 18, 2012 Share Posted July 18, 2012 Here are the terms: http://phx.corporate-ir.net/phoenix.zhtml?c=198015&p=irol-newsArticle&ID=1715608&highlight= Link to comment Share on other sites More sharing options...
actuary Posted July 18, 2012 Share Posted July 18, 2012 Looks like a strong quarter for BAC. TBV to $13.22/share. Projected "New BAC" savings now estimated at $8B. Basel 3 Tier 1 common capital ratio to 8.10%. Deposits steady, loans down. http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=1715712&highlight=#fbid=Io4gXhRuzhN Link to comment Share on other sites More sharing options...
racemize Posted July 18, 2012 Share Posted July 18, 2012 Looks like a strong quarter for BAC. TBV to $13.22/share. Projected "New BAC" savings now estimated at $8B. Basel 3 Tier 1 common capital ratio to 8.10%. Deposits steady, loans down. http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=1715712&highlight=#fbid=Io4gXhRuzhN most things looked good, but there was a trend among the individual segments of lowering ROE, which was a bit sad. Link to comment Share on other sites More sharing options...
dcollon Posted July 18, 2012 Share Posted July 18, 2012 The increase in R&W claims was not good either. I realize that we don't know how this will completely play out, but claims jumping from $16 bil to $22 bil keeps pressure on the valuation. Link to comment Share on other sites More sharing options...
Uccmal Posted July 18, 2012 Share Posted July 18, 2012 The increase in R&W claims was not good either. I realize that we don't know how this will completely play out, but claims jumping from $16 bil to $22 bil keeps pressure on the valuation. Hi dcollon, what page of the supplemental is this info on? In the spirit of education... Link to comment Share on other sites More sharing options...
racemize Posted July 18, 2012 Share Posted July 18, 2012 The increase in R&W claims was not good either. I realize that we don't know how this will completely play out, but claims jumping from $16 bil to $22 bil keeps pressure on the valuation. They did indicate that these were fully expected based on the DOJ settlement (i.e., already reserved). Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now