BAC-WT - Bank of America Warrants

[Redskin212]

Nothing like the Fed setting the stage for rumours and speculation.  Releasing the data in two stages is ridiculous - the only reason they are doing it this way is because Citigroup got too greedy last year and got egg on their face.

[wescobrk]

http://www.bloomberg.com/news/2013-03-06/stress-tests-seen-boosting-u-s-bank-shareholder-payouts.html

 

This article says nothing from Citi and 3 bil -total- from BAC.

If that is true, BAC's balance sheet will look ridiculous as early 2014 comes around and they only paid out 3 billion in 2013.

[ERICOPOLY]

Nothing like the Fed setting the stage for rumours and speculation.  Releasing the data in two stages is ridiculous - the only reason they are doing it this way is because Citigroup got too greedy last year and got egg on their face.

 

The way to have the least amount of media interest would be to just go ahead and tell the banks what they are allowed to return.  Instead, they create this media circus where than can potentially publicly slap down a banks' request.  It's unnecessary to have the banks ask.

[Kraven]

Nothing like the Fed setting the stage for rumours and speculation.  Releasing the data in two stages is ridiculous - the only reason they are doing it this way is because Citigroup got too greedy last year and got egg on their face.

 

The way to have the least amount of media interest would be to just go ahead and tell the banks what they are allowed to return.  Instead, they create this media circus where than can potentially publicly slap down a banks' request.  It's unnecessary to have the banks ask.

 

That would place the regulators in the position of essentially being responsible for the situation.  It may be semantics, but there is a difference.  If you are standing on a bridge there is a difference between me saying jump and you saying can I jump and me shrugging my shoulders.  In one case, I "caused" it.  In the other, well, what can you do?

[rkbabang]

Nothing like the Fed setting the stage for rumours and speculation.  Releasing the data in two stages is ridiculous - the only reason they are doing it this way is because Citigroup got too greedy last year and got egg on their face.

 

The way to have the least amount of media interest would be to just go ahead and tell the banks what they are allowed to return.  Instead, they create this media circus where than can potentially publicly slap down a banks' request.  It's unnecessary to have the banks ask.

 

That would place the regulators in the position of essentially being responsible for the situation.  It may be semantics, but there is a difference.  If you are standing on a bridge there is a difference between me saying jump and you saying can I jump and me shrugging my shoulders.  In one case, I "caused" it.  In the other, well, what can you do?

 

I disagree.  You didn't cause it in your scenario unless you gave me a push.  All the people in the world yelling for me to jump can't cause me to jump. 

 

They could say you are allowed to return $X and let the banks decide what amount <=$X they wish to return.  Of course, I wish they'd just all get out of the way and let banks do what they will. This goes for good times and bad.  I didn't support the bailouts. I don't think responsibility for ones actions is something that should ever be excused or suspended.

 

 

[Kraven]

Nothing like the Fed setting the stage for rumours and speculation.  Releasing the data in two stages is ridiculous - the only reason they are doing it this way is because Citigroup got too greedy last year and got egg on their face.

 

The way to have the least amount of media interest would be to just go ahead and tell the banks what they are allowed to return.  Instead, they create this media circus where than can potentially publicly slap down a banks' request.  It's unnecessary to have the banks ask.

 

That would place the regulators in the position of essentially being responsible for the situation.  It may be semantics, but there is a difference.  If you are standing on a bridge there is a difference between me saying jump and you saying can I jump and me shrugging my shoulders.  In one case, I "caused" it.  In the other, well, what can you do?

 

I disagree.  You didn't cause it in your scenario unless you gave me a push.  All the people in the world yelling for me to jump can't cause me to jump. 

 

They could say you are allowed to return $X and let the banks decide what amount <=$X they wish to return.  Of course, I wish they'd just all get out of the way and let banks do what they will. This goes for good times and bad.  I didn't support the bailouts. I don't think responsibility for ones actions is something that should ever be excused or suspended.

 

If you noticed, I put "caused" in quotes.  I know they didn't cause it, but that's the perception and that's why they will never just tell them what they can do.  If they inform the banks of the number, then the public is going to view them as responsible for anything that happens.  There is a difference in view between agreeing to a number and informing of the number.  It will never happen.

[nkp007]

http://dealbook.nytimes.com/2013/03/06/with-legal-reserves-low-bank-of-america-faces-a-big-lawsuit/?pagewanted=print

 

MARCH 6, 2013, 12:00 PM

With Legal Reserves Low, Bank of America Faces a Big Lawsuit

 

By JESSE EISINGER

Bank of America has been underestimating its legal risks for years, and brazenly so, according to its critics. Is that strategy about to pay off with the Federal Reserve?

 

On Thursday, the Fed will release figures on how much capital the nation’s biggest banks must have to cover a “stress” situation. The following week, investors find out whether those banks will be able to return more of their capital to shareholders by paying dividends or buying back stock.

 

Last year, the Fed passed most of the big banks and let them pay out billions. Bank of America, picking up an unwelcoming vibe, didn’t even ask. This year, however, Wall Street expects that Bank of America will get the green light.

 

Yet the bank continues to face gargantuan payouts to clean up legal disputes from the bubble years. Now a lawsuit suggests that the bank’s mortgage portfolio could cost it tens of billions more than it had planned. In one big case, if things go wrong, Bank of America may be required to make good on many more billions worth of bad mortgages from Countrywide Financial, which the bank acquired, in the sense that one acquires Ebola virus, in 2008.

 

Bank of America, however, has kept its legal reserves low — perhaps dangerously so.

 

The dispute involves a 2011 settlement that Bank of America reached with some of the world’s biggest investors, including Pimco and BlackRock for $8.5 billion. That amount covers more than $400 billion of Countrywide loans, on which there have been tens of billions of losses. The actual loss total is in dispute because they are estimates, but it ranges from $70 billion or so to well over $100 billion. That means, at the high end of the range, the settlement was for pennies on the dollar. On a conference call last week held by Mike Mayo, the CLSA bank analyst, a legal expert suggested that if things went south in the courts for Bank of America, the settlement might rise to $25 billion to $30 billion.

 

Bank of America contends that its reserves are reasonable, based on its estimated probable payouts. The bank wouldn’t raise them “based on speculation from third-party observers who are not directly involved in any of these matters,” a spokesman said.

 

Even in the fun house of litigation about mortgages, this one is particularly complicated. The dispute revolves around the question of whether another bank, BNY Mellon, working on behalf of mortgage-backed securities investors, was reasonable and acted in good faith in agreeing to the settlement. It is being hashed out in New York State Supreme Court. BNY Mellon is the trustee on 530 securitizations, or bundles of Countrywide mortgages, that were sold to investors.

 

The insurer American International Group, along with some others, including the New York and Delaware attorneys general, are fighting about the settlement. Eric T. Schneiderman, the New York attorney general, has accused BNY Mellon of breaching its fiduciary duty. A BNY Mellon spokesman said, “We believe we have fulfilled all of our duties as trustee in this case.”

 

The small settlement doesn’t sit right. The group of investors who agreed to it hold only about a quarter of the securities, making it appear as if a minority has forced a bad deal on the majority in order to get few quick bucks and resolve any dispute. The Pimcos and BlackRocks of the world don’t like to sue big banks. Things can get a little uncomfortable on the golf links. (They contend it was reasonable, given all the legal uncertainties of a protracted dispute.)

 

And who blessed the $8.5 billion figure anyway? To figure out whether it was fair, BNY Mellon relied on a firm called RRMS Advisors, a mortgage analysis firm.

 

The RRMS estimate has been in dispute for some time now. The firm relied on information from Bank of America, and critics contend it underestimated problems in the loans and the total losses. How BNY Mellon found little RRMS isn’t clear; the bank wouldn’t comment. RRMS’s Brian Lin, who conducted the analysis, stood by his report, but declined to comment further.

 

Recently, other court rulings have boded ill for Bank of America. Judge Jed S. Rakoff of the Federal District Court in Manhattan has ruled that an insurer called Assured Guaranty was able to dispute mortgages that it backed and that were made by a small bank called Flagstar, without having to show that the contractual breach was the direct cause of the loss. In other words, the borrower may have defaulted, but Assured didn’t have to demonstrate that it was because she didn’t make $150,000 a year as a tarot card reader, as had been claimed on the borrower’s loan application. If Bank of America is hit by such a ruling too, it might have to pay more. It argues its contracts are different.

 

So is Bank of America vulnerable? Not surprisingly, it is keeping whole swaths of expensive Manhattan law firms working all hours of the day to make the case that it isn’t. BNY Mellon, too, contends it acted reasonably.

 

And the banks contend the $8.5 billion settlement is in line with other similar settlements. Of course, the investors continue to face huge hurdles even if rulings in this case start to go their way.

 

But even if the chances are low that the cases don’t go in Bank of America’s favor, an increase in legal reserves could be huge. So this is a low-probability, high-risk event. Another way of saying that is that it is a “stress” situation. And who just put banks through stress situations? Ah, right, the Federal Reserve.

 

The Fed, whose earlier decisions have been generous to the banks, declined to comment for this column.

 

As Professors Anat Admati and Martin Hellwig, authors of the new book, “The Banker’s New Clothes,” have argued, the big banks are undercapitalized and the simplest way for them to start building capital is to keep their profits instead of returning them to shareholders.

 

A look at Bank of America’s estimates for how much it will have to pay for its mortgage liability is telling. It has gone up steadily each year. In 2009, the bank had a reserve of $3.5 billion. By last year, it had jumped to $19 billion, with an estimate of additional loss of up to another $4 billion.

 

And so Bank of America seems to have been consistently underestimating its legal exposure. (And it has other, undisclosed legal reserves for different cases. The incentives to lowball those are much greater, because the public cannot scrutinize them.)

 

In keeping the reserves low, Bank of America has already won. If it turns out that the bank loses its cases and has to fork over much more money, it nevertheless has managed to make its books look that much better for years. That surely helped as it has tried to dig itself out of its financial crisis hole.

 

“This is an accounting arbitrage,” says Manal Mehta, a hedge fund manager who has been on a lonely crusade for years to follow the complexities of these cases. “The accounting rules give you a lot of latitude in setting reserves,” he says. Bank of America is “hiding behind that.”

 

Fortune may favor the bold, but regulators just give them a pass.

[MYDemaray]

There are always one of a handful of people behind these articles: Mike Mayo, Mark Palmer. Isaac Gradman, Chris Herceza and one other guy whose name slips my memory.  This article is no exception.

[Parsad]

There are always one of a handful of people behind these articles: Mike Mayo, Mark Palmer. Isaac Gradman, Chris Herceza and one other guy whose name slips my memory.  This article is no exception.

 

It's amazing how the media is used by analysts, managers, etc...be it for or against.  Cheers!

[nkp007]

It's the reason we can make a lot of money in the long-term.

[PlanMaestro]

There are always one of a handful of people behind these articles: Mike Mayo, Mark Palmer. Isaac Gradman, Chris Herceza and one other guy whose name slips my memory.  This article is no exception.

 

There was a guy that I used to follow in Twitter. He talked about "hundreds of billions in loses" but I forget his name. Might that be him?

[onyx1]

There are always one of a handful of people behind these articles: Mike Mayo, Mark Palmer. Isaac Gradman, Chris Herceza and one other guy whose name slips my memory.  This article is no exception.

 

It's amazing how the media is used by analysts, managers, etc...be it for or against.  Cheers!

 

So true.  Manal Mehta is a MBI long and has a shill for Brown for years.  A good journalist would disclose this fact.  Instead we get this type of conclusion:

 

"The Pimcos and BlackRocks of the world don’t like to sue big banks. Things can get a little uncomfortable on the golf links."

 

Absurd, untrue, and a cheap attempt to reinforce a stereotype often held by low information readers.  The author lost me right there.

 

[MYDemaray]

There are always one of a handful of people behind these articles: Mike Mayo, Mark Palmer. Isaac Gradman, Chris Herceza and one other guy whose name slips my memory.  This article is no exception.

 

There was a guy that I used to follow in Twitter. He talked about "hundreds of billions in loses" but I forget his name. Might that be him?

 

Ha - forgot about Whelan!  Was thinking of Mehta.  Good catch Plan

[ERICOPOLY]

Were the NYTimes to write a bullish article on BAC citing quotes from Berkowitz, Munger, and Buffett praising the wonderful franchise, it would likely outrage too many NYTimes readers.

 

[Kraven]

So true.  Manal Mehta is a MBI long and has a shill for Brown for years.  A good journalist would disclose this fact.  Instead we get this type of conclusion:

 

"The Pimcos and BlackRocks of the world don’t like to sue big banks. Things can get a little uncomfortable on the golf links."

 

Absurd, untrue, and a cheap attempt to reinforce a stereotype often held by low information readers.  The author lost me right there.

 

Classic.  You have to love the populist, us vs them approach that these articles take on.  It's the kind of thing that appeals to the "little guy".  There's this sense that there's this whole world out there that's hidden.  A world of backroom and shady deals.  It's why the corporate guy in the movies is always smoking a cigar and covered with a blanket of smoke while cackling at how they are going to stomp on anyone in their way.

 

It's also a very dated viewpoint.  I think there was a time, a long time ago, when large banks and corporations reigned supreme and it was the case where someone might be afraid to sue them, in part, because of it being uncomfortable on the golf course or in other social situations.  I have to say though that those days went out the window probably no later than when M&A became a sport and "ready, fire, aim" became the mantra of a generation.

[enoch01]

There are always one of a handful of people behind these articles: Mike Mayo, Mark Palmer. Isaac Gradman, Chris Herceza and one other guy whose name slips my memory.  This article is no exception.

 

There was a guy that I used to follow in Twitter. He talked about "hundreds of billions in loses" but I forget his name. Might that be him?

 

Ha - forgot about Whelan!  Was thinking of Mehta.  Good catch Plan

 

Such a distant memory that we can't even spell his name correctly any more  :)

 

Frankly I'm really starting to hope the settlement is rejected.  I hope that isn't too greedy of me.

[OracleofCarolina]

Another real estate sale for BAC in uptown Charlotte

http://m.bizjournals.com/charlotte/blog/real_estate/2013/03/wake-forest-building-uptown-sells-for.html?ana=RSS&s=article_search&utm_source=dlvr.it&utm_medium=twitter&r=full

 

[stylized_fact]

There are always one of a handful of people behind these articles: Mike Mayo, Mark Palmer. Isaac Gradman, Chris Herceza and one other guy whose name slips my memory.  This article is no exception.

 

There was a guy that I used to follow in Twitter. He talked about "hundreds of billions in loses" but I forget his name. Might that be him?

 

Ha - forgot about Whelan!  Was thinking of Mehta.  Good catch Plan

 

Such a distant memory that we can't even spell his name correctly any more  :)

 

 

He should be remembered well for helping to create such a wonderful opportunity.

[Uccmal]

Anyone other than me and Eric making a mountain of money this week.  I have started to reduce the Bac high strike options by a few percent. 

 

BAC, AIG, SSW, JPM, WFC, and even FFH a little bit. 

[hyten1]

i made some money but not mountains like you and eric

 

i wish i had bought more options

 

i only allocated 30% to BAC

 

i can only do what i am/was comfortable

 

hy

[wescobrk]

I'm up about 100% this year in taxable account and up 50% in Roth. I will be making adjustments very soon. I went all in though. I thought the catalyst from the ST was a no brained due to psychology of the masses.

[ERICOPOLY]

I feel like the stock is going to drop again now after the results are out.  I am skeptical that there will be any rally like last year -- I feel like we've already had it over the past couple of months with people remembering what happened around the results last year.

[racemize]

I feel like the stock is going to drop again now after the results are out.  I am skeptical that there will be any rally like last year -- I feel like we've already had it over the past couple of months with people remembering what happened around the results last year.

 

sounds about right to me, although I've given up predicting movement as I have no idea what the market is "expecting" at this point.

[Straddle]

I feel like the stock is going to drop again now after the results are out.  I am skeptical that there will be any rally like last year -- I feel like we've already had it over the past couple of months with people remembering what happened around the results last year.

 

More and more people seem to get bullish on BAC and other banks, which makes me nervous as a BAC investor. I liked it way better when they were more hated and feared at the 6$ - 7$ level. I'm wanted to write covered calls expiring weekly to hedge my long position, but they keep jumping higher and higher in price.

I also think a drop might be coming with the results coming out soon.

[Straddle]

I feel like the stock is going to drop again now after the results are out.  I am skeptical that there will be any rally like last year -- I feel like we've already had it over the past couple of months with people remembering what happened around the results last year.

 

sounds about right to me, although I've given up predicting movement as I have no idea what the market is "expecting" at this point.

 

This guy sure is bullish  :P: http://www.cnbc.com/id/100532573