As BAC stock continues to fall, interesting perspective

[moore_capital54]

ValueCFA I got the same email, this is nuts, I got it just now from two colleagues. Total BS, the last think the gov wants is JPM any bigger.

 

This was a very good interview:

 

http://www.bloomberg.com/news/2011-08-24/meredith-whitney-says-there-s-no-mad-dash-for-capital-at-bofa.html

 

 

[moore_capital54]

Here are the contents of this email:

 

"There is a rumor circulated on Wall St. that JP Morgan (NYSE: JPM) will take over Bank of America (NYSE: BAC) within the week. The government will support the deal with a $100 billion investment in preferred shares issued by the combined entity. Alternatively, the government may guarantee the value of a large pool of Bank of America assets. The word is that Treasury Secretary Geithner has discussed the transaction with JP Morgan CEO Jamie Dimon.The “merger” would completely destroy the value of BAC’s common shares.

The government feels that the deal may be necessary as Bank of America struggles unsuccessfully to close several transactions to bolster its balance sheet. The Wall Street Journal reported that the financial firm will need to raise $200 billion which would be another possible event that would wipe out common shareholders.

Bank of America’s fortunes have been hurt by events in just the last few days. A New York State judge agreed to allow institutional investors to intervene in an $8.5 billion settlement between the bank and groups that lost money on mortgage-backed securities. China Construction Bank Corp said Bank of American will continue to hold 50% of its share in the foreign financial firm. Many investors hoped Bank of America would sell its entire stake to raise money. Several analysts believe that the costs of owning mortgage firm Countrywide Credit have grown unexpectedly large.

"

 

I cannot believe how gullible Wall St. is becoming, note how they short sellers attempt to quote the WSJ when the WSJ was quoting Blodget. I would love to find the guy who started this rumor...

[Junto]

A trader just sent me an detailed email that there is a new rumor being floated JPM may buy BAC with the help of treasury. This is how things start...it's just a rumor that I imagine is floating across the trading desks this am. I don't buy it but thought I would pass it along

 

This was out yesterday if you follow on Stocktwits. http://stocktwits.com/symbol/BAC

 

 

[Munger]

Couple of questions for the spirited bulls:

1) During this epic collapse in the stock price, how many insiders have reached into their back pocket and bought stock?  How much did they buy?  And specifically, how much of his own money has the CEO invested in the stock at these supposed ridiculously low valuation levels?

2)  What happens to BAC if home prices decline by a modest 5-10% next year?  How does the margin of safety hold up under that scenario?  Similarly, what happens if US falls into a recession?

 

And here is another opinion on the banks.  Not a big fan of BR but he sure does have a dramatically different viewpoint than the bulls on this board.

 

The US banking sector is not healthy.

 

There is a fundamental misunderstanding about the Wall Street bailouts amongst the public, and quite a few policy makers at Treasury and the Federal Reserve: Somehow, they “fixed” the banking system. All it took was few trillion dollars in liquidity and a few $100 billion dollars in recapitalization, and all is now fine (I suspect some people at the Fed know the Truth).

 

In fact, they did nothing of the sort. The banking system was not saved; The massive injection of liquidity temporarily salved the day-to-day operations of banks, but they did not repair what ailed our financial institutions. Indeed, pouring billions into nearly identical management teams that mismanaged the risk, over-leveraged exposure, and drove banks off the cliff in the first place was an invitation for another crisis.

 

And that crisis now appears to be arriving. And, its our own fault.

 

Consider what was actually done in 2008-09, and you will understand why none of the underlying problems have been repaired:

 

 

• Bank holdings: Remain stuffed with declining assets, primarily in Housing and Derivative holdings. Another leg down in Housing could be nearly fatal.

 

• Transparency: Balance sheets are unnecessarily Opaque; Eliminating Fair value accounting via FASB 157 did not fix balance sheet problems, but instead allowed banks to hide them.

 

• Capitalization:  Remains too thin; leverage should be mandated back to the pre-2005 rule change of no more than 12 to 1; As we have learned, management does not keep adequate capital unless mandated to do so (sufficient capital reserves cuts into profits);

 

• Misaligned Incentives: Compensation and bonus schemes were not significantly changed after bailouts, except during loan repayments. Thus, management and traders still have the same upside to roll the dice, but do not have the downside risks, which remains on shareholders and taxpayers;

 

Let’s use a counter-factual, a simple thought experiment of what would have been had we gone Swedish on banks like Citi and B of A, placing them into a prepackaged reorganization (that’s a polite phrase for “bankruptcy”).

 

The easy stuff: Senior management all gets fired. More than just the CEO — nearly the entire top floor at the bank, including the Board of Directors, gets canned. Equity shareholders get wiped out. Whatever is left over after all is said and done goes to the bondholders, typically, at about 25-50 cents on the dollar. (Note that in Sweden, bondholders got 100 cents on the Kroner, but that currency was significantly devalued — so the bondholders were not made whole, they lost between 50-75%).

 

Temporary nationalization is the play: Uncle Sam provides debtor-in-possession financing to keep operating. All of the bad holdings, mortgages, derivatives and other liabilities are pulled out, and auctioned off. This includes the REOs, the CDS/CDO book, defaulted mortgage obligations. Remember, there is no such thing as toxic assets, only toxic prices. At some valuation, these are worthwhile investments — just not 100 cents on the dollar. Let healthy buyers pay 15-30 cents.And anything that is worthless is written down to zero.

 

We recapitalize the parent bank, and spin off each division: IPO Merrill Lynch for $20 billion, spin out a clean  Countrywide at $8 billion, sell of all of the non depository bank pieces. What you have left over is a well capitalized bank, owned by Taxpayers, with well capitalized former divisions as stand-alone companies. All of the above have transparent balance sheets (No FASB 157 required to hide the garbage investments). Eventually, everything is spun out back to the public markets. Uncle Sam is repaid, and what is left over goes to the bondholders.

 

This would have created a transparent, unleveraged, adequately capitalized banking system that would be contributing to, rather than detracting from, the US economy.

 

But all that was a missed opportunity — for W and O alike. What we have today instead is an over concentrated set of banking behemoths, barely off life support. Many of these remain mortally wounded by the holdings — holdings that they would have to shed through a healthy reorg.

 

The recent downturn in the banking sector? I suspect it amounts to nothing more than a credible bet that these banks are not in any condition to withstand the next recession. (No, it was not Henry Blodget’s Fault). A rise in unemployment and another next leg down in Housing could very well be fatal.

 

If the banks come crawling back to Uncle Sam for another bailout, it will be proof that “rescuing” failing financial institutions that blow themselves up is the exact wrong strategy.

 

Real Capitalists know failure is part of the process. I suspect we may have another chance at a banking reorg. Let’s hope we do it correctly this time . . .

 

 

[shalab]

This was how JPM took over Wamu - it was a very profitable take over of a solvent entity with FDIC assist. Eventhough WFC was interested, the bid was rigged in favor of JPM. JPM had offered $8/share earlier which Wamu rejected. But JPM ended up getting the entity for free!

 

The case is still winding through the court system - it is fascinating how the system is rigged in favor of big players. There aren't many ethical people when money is involved.

 

I wont be surprised if JPM started this rumor...

 

 

[Munger]

I've never met Blodgett but he seems fair and reasonable in this case.  Here is the chance for the bulls on this board to prove their point -- step up and answer the call.  No more platitudes -- do the work and support your passion.

 

DEAR READERS: Please Help Me Figure Out What Bank Of America Is Actually Worth

 

Read more: http://www.businessinsider.com/what-is-bank-of-america-worth-2011-8#ixzz1VxDPXAH1

 

As you might have noticed, there was a bit of a kerfluffle this afternoon when Bank of America took issue with a blog post I wrote about why its stock was collapsing.

 

In the post, I explained that the market clearly didn't believe that Bank of America's assets were worth what Bank of America says they are worth (this seems self-evident).

 

I also relayed some asset-exposure numbers from Zero Hedge and Yves Smith, two of which Bank of America says were wrong. (I added Bank of America's comments to the post. If Bank of America is right and Yves Smith is wrong, I apologize.)

 

Truth be told, the last thing I wanted to spend one of the last weeks of summer doing was digging into Bank of America's balance sheet, especially with so many more important things going on.

 

But Bank of America's stock keeps tanking--it's down again, in the aftermarket, despite having been upgraded today by JP Morgan. Basically, the stock is acting like the company is insolvent. And now that my blog post has been blown up into this huge "call" on Bank of America, I actually do want to get to the bottom of this.

 

So I would be grateful for your help.

 

Please send me any detailed analyses of Bank of America's balance sheet that you've found helpful (links or PDFs). I'll review them, summarize what I learn, and then see if and where there might be more useful work to be done.

 

My email is hblodget@businessinsider.com.

 

Thank in advance!

 

 

[Munger]

Also from Blodgett twitter post -- "BTW, with help of readers, I've checked $BAC's European exposure. It is "$17 billion," just as Yves Smith said. Not "off by factor of 10""

 

I have no idea but notable that he and others are on the record saying BAC management has outright lied in a formal press release.

 

Will be interesting to see how this plays out because if Blodgett and others are correct, BAC management has now opened itself up to serious legal liability.

 

 

[moore_capital54]

Munger Keep it up, the stock is literally forming a bottom as you post your thoughts. Also it appears you did all this homework yesterday, why did you wait to post today? Why not just post it right after you finished the schoolwork.

 

Moynihan made it very clear he intends to buy shares when he is allowed to do so on the call with berkowitz. Moreover he made it very clear his ENTIRE net worth is in BAC.

[Munger]

Remeber -- I have no opinion on whether the stock is a buy or a sell.  But I do know for certain that the bulls on this board support their case with no analysis...zero...nada.

 

"the stock is literally forming a bottom"

 

I believe I heard that assertion at $11 and $9 and $7 and now $6ish.

 

You all should be thrilled about the JPM rumor because it is giving the stock a nice boost.

 

"Moynihan made it very clear he intends to buy shares when he is allowed to do so on the call with berkowitz."

 

Very unsual we're still waiting to see him act.  What could be the legal impediment this long after the call? -- efforts to raise capital??? -- but how would that be possible since they don't need to raise capital?

 

"Moreover he made it very clear his ENTIRE net worth is in BAC."

 

If true, how could he have $ to buy more?

 

Something doesn't smell right.

 

Also waiting for answer to question #2. 

 

 

 

[moore_capital54]

Munger he could use this month's salary....

 

Your views are far from balanced, there is an agenda behind them.

 

 

 

 

[oddballstocks]

Remeber -- I have no opinion on whether the stock is a buy or a sell.  ...

 

I don't have a view either, but if it looks like a duck, quacks like a duck...seems like you think it's a sell even though you won't admit it.

 

Anyways this is a fascinating thread because I think it reveals how much of this is a sentiment game.  The numbers are out there, some great posts have been made on this board over them yet people can't help themselves from thinking emotionally about the company.  There is a lot of emotional baggage from the 2008 crisis.  If BAC was in a foreign country and had no stigma or name recognition I think a lot of people would look at the numbers, management, and look at the problems and would figure they were solvable.  Of course maybe they aren't, I have no clue, but either way this needs to be looked at without emotion.

 

I'm not smart enough to analyze BAC, but I recognize that this is a loaded stock.  It is either going to end up at zero or be a 5 bagger.

 

Best of luck to all!

[rranjan]

"No, it just shows how a value investor thinks. First, downside protection."

 

You are now down 50% -- so much for the protection.

 

 

50% decline in stock quotation in last few months is being equated to no downside protection? Do you really think that way?

 

Munger - You chose not to respond to this. Should I assume that you agree here?

[merkhet]

 

Truth be told, the last thing I wanted to spend one of the last weeks of summer doing was digging into Bank of America's balance sheet, especially with so many more important things going on.

 

 

Am I reading this incorrectly or is Blodget basically saying -- "Yea, I didn't dig into Bank of America's balance sheet before I pulled numbers out of my @$$"...

 

 

Also from Blodgett twitter post -- "BTW, with help of readers, I've checked $BAC's European exposure. It is "$17 billion," just as Yves Smith said. Not "off by factor of 10""

 

 

I read Yves quite frequently, and she has a bit of a mea cupla up this morning.  (For the record, I find her generally very good, but in this case, I think she's off.)  http://www.nakedcapitalism.com/2011/08/more-on-the-opacity-of-bank-of-americas-financial-statementss.html

 

 

I said that the conference call gave a figure of $17 billion of European sovereign exposures and claimed it was hedge (I expressed my skepticism as to how good those hedges would prove to be in a crisis). From the transcript:

 

The area that’s drawn the most attention are obviously the countries of Greece, Ireland, Italy, Portugal, and Spain, and going back to the first quarter of 2010 as we started thinking about sovereign debt and sovereign exposure, as Brian alluded to, we took a hard look at the types of risk that we were taking and focused very much to make sure that we were comfortable to the extent that there was a prolonged period where this went on, and if you look at our 10-Q, I think that the most telling thing that we can speak to is, within that region, we had $16.7 billion of exposure. Of that exposure, roughly $1.6 billion of it was to sovereign entities and we had credit default protection on roughly $1.5 billion of that $1.6 billion of exposure.

 

You can see Thompson said they have $16.7 billion and then said they have $1.6 billion. The 10-Q clarifies matters

 

Bank of America's total European exposure is $16.7 billion.  Bank of America's total European sovereign exposure is $1.6 billion.  I guess Yves (and by extension Blodget) got confused because neither read the actual 10-K/Q before posting. Oops.

[PlanMaestro]

Bank of America's total European exposure is $16.7 billion.  Bank of America's total European sovereign exposure is $1.6 billion.  I guess Yves (and by extension Blodget) got confused because neither read the actual 10-K/Q before posting. Oops.

 

That is Euro Europe minus France (UK numbers should not be included, and no German Exposure). France numbers are big but still, less than 6 months of PTPP and around 1% of assets. Remember that all these numbers include relations w/ multinationals that will not do that badly even in a crisis.

 

France

Public Sector: 1B

Banks: 8B

Private: 16B

Total: 25B

[merkhet]

 

That is Euro Europe minus France (UK numbers should not be included, and no German Exposure). France numbers are big but still, less than 6 months of PTPP and around 1% of assets. Remember that all these numbers include relations w/ multinationals that will not do that badly even in a crisis.

 

France

Public Sector: 1B

Banks: 8B

Private: 16B

Total: 25B

 

You're right -- mis-labeling on my part.  Total PIIGS exposure and total PIIGS sovereign exposure is what I should have written.  Thanks for the French numbers.

[Munger]

For the record, again -- I have no agenda.  No opinion on the stock.  I do firmly believe the bull case is not supported by any analysis.  And there would be none happier than me if someone/anyone could provide sound, factual analysis supporting the bull case...but all anyone can do is parrot management's assertions re tangible book value and "normalized pre-tax pre-provision earnings."

 

Rranjan -- I didn't answer your question because I thought it was the height of ignorance.  With the question, you come across as someone who just finished reading Buffett and Graham writings for the first time, believing you are now one of the few "enlightened" and couldn't wait to pounce on the "less enlightened" -- very funny. 

 

So no -- I don't "think" that way.  If I had a position in which I had full confidence and the stock price was cut in half in less than a month to an absurd valuation, I would buy as much as I possibly could at the new lower valuation.  I would also be able to support my action with independet, factual analysis.

 

In this case, however, I believe the original Berkowitz thesis (seemingly embraced by many on this board) has been shattered because the thesis was never supported any analysis -- just parroting management, with platitudes thrown in -- e.g., stock is already at a discount to tang bv, future cash flows massive...impossible for downside in stock price.  Berk put 20% of his fund in the stock because he argued there was no material downside given the "obvious" valuation.  If the company was fully capitalized at $15 and then $11 with nothing but years of massive cash flows in the future, why have we not seen a MASSIVE buy back of stock at these "low" levels?  Why has there been ZERO insider buying at these levels?  Why does the company now hint at efforts to raise capital??? -- how is this possible.  What happens to this margin of safety in a recession?  Management responds to Blodgett with a press release that equates to nothing more than name calling??? 

 

[moore_capital54]

Wire: BLOOMBERG News (BN) Date: Aug 24 2011  10:53:27

Bank of America Memo Says JPMorgan Merger Talk Is ‘Baseless’

 

 

By Christine Harper and Alexis Xydias

    Aug. 24 (Bloomberg) -- Bank of America Corp., the biggest

U.S. bank by assets, dismissed speculation it’s considering a

merger with smaller rival JPMorgan Chase & Co. as “baseless”

in a memo to employees.

    “Some blogs are speculating about rumors of merger talks

with J.P. Morgan Chase, which are baseless and don’t even make

practical sense,” the bank’s communications department said in

a memo to employees yesterday that was obtained by Bloomberg.

Jerry Dubrowski, a spokesman at Bank of America, confirmed the

contents of the memo.

    The memo also rebutted a blog’s suggestion that Charlotte,

North Carolina-based Bank of America needs to raise as much as

$200 billion as “just wrong.”

    “We have a clear path to meet the new regulatory

requirements under Basel III and we intend to meet these

standards without having to issue additional common stock,”

according to the memo.

 

For Related News and Information:

On banks and mergers: TNI BNK MNA <GO>

Bank of America financial analysis: BAC US <Equity> FA <GO>

Top finance news: FTOP <GO>

 

--Editors: Steve Dickson, Dan Kraut

 

To contact the reporters on this story:

Christine Harper in New York at +1-212-617-5983 or

charper@bloomberg.net;

Alexis Xydias in London at +44-20-7073-3372 or

axydias@bloomberg.net

[moore_capital54]

For the record, again -- I have no agenda.  No opinion on the stock.  I do firmly believe the bull case is not supported by any analysis.  And there would be none happier than me if someone/anyone could provide sound, factual analysis supporting the bull case...but all anyone can do is parrot management's assertions re tangible book value and "normalized pre-tax pre-provision earnings."

 

Rranjan -- I didn't answer your question because I thought it was the height of ignorance.  With the question, you come across as someone who just finished reading Buffett and Graham writings for the first time, believing you are now one of the few "enlightened" and couldn't wait to pounce on the "less enlightened" -- very funny. 

 

So no -- I don't "think" that way.  If I had a position in which I had full confidence and the stock price was cut in half in less than a month to an absurd valuation, I would buy as much as I possibly could at the new lower valuation.  I would also be able to support my action with independet, factual analysis.

 

In this case, however, I believe the original Berkowitz thesis (seemingly embraced by many on this board) has been shattered because the thesis was never supported any analysis -- just parroting management, with platitudes thrown in -- e.g., stock is already at a discount to tang bv, future cash flows massive...impossible for downside in stock price.  Berk put 20% of his fund in the stock because he argued there was no material downside given the "obvious" valuation.  If the company was fully capitalized at $15 and then $11 with nothing but years of massive cash flows in the future, why have we not seen a MASSIVE buy back of stock at these "low" levels?  Why has there been ZERO insider buying at these levels?  Why does the company now hint at efforts to raise capital??? -- how is this possible.  What happens to this margin of safety in a recession?  Management responds to Blodgett with a press release that equates to nothing more than name calling???

 

Munger again, you are answering your own questions. The reason BAC cannot distribute dividends or buy back stock is the same reason it will never be allowed to fail or take significant write downs. Post Lehman, there is an implicit guarantee on too big to fail institutions. Just as BAC was denied a dividend or a stock buy back, the Central Banks will be there should the only real risk to it's business emerge... a bank run.

 

 

[PlanMaestro]

Anyways this is a fascinating thread because I think it reveals how much of this is a sentiment game.  The numbers are out there, some great posts have been made on this board over them yet people can't help themselves from thinking emotionally about the company.  There is a lot of emotional baggage from the 2008 crisis.  If BAC was in a foreign country and had no stigma or name recognition I think a lot of people would look at the numbers, management, and look at the problems and would figure they were solvable.  Of course maybe they aren't, I have no clue, but either way this needs to be looked at without emotion.

 

I live South of Rio Grande and I am amazed how people quickly forgot the Latin debt crisis, Volcker, Brady bonds, and how deep were Citibank and Bank of America moving petrodollars south of the border. Nothing new under the sun. 

 

Banks in my country were BK, nationalized and then floated again. They could be bought 10y after the crisis at BV and 6-7 P/E and still had a large government ownership... that was the stigma. I will not tell you their current valuations (OK, check Santander Chile SAN that I think is at 4x BV).

 

For me the Citigroup situation is even more amazing than Bank of America considering they own Banamex and they do not have the MBS hangover. By itself Banamex is worth more than 30B and is a well managed bank. Worried about insider buying? Just look at what Medina Mora and Hernandez are doing.

 

We in Latin America have seen it all, and this too shall pass. I do not know in what conditions ... but at least for the US it does not look remotely what we had to suffer (my thoughts are for the Greeks).

 

 

[txlaw]

If the company was fully capitalized at $15 and then $11 with nothing but years of massive cash flows in the future, why have we not seen a MASSIVE buy back of stock at these "low" levels?  Why has there been ZERO insider buying at these levels?  Why does the company now hint at efforts to raise capital??? -- how is this possible.  What happens to this margin of safety in a recession?  Management responds to Blodgett with a press release that equates to nothing more than name calling???

 

Massive buyback?  This indicates you know nothing about BAC.  To even suggest that BAC can buyback stock is ignorant.

 

Insider buying?  Perhaps you need to understand on a more general level when insiders are allowed to buy.  Do some research on insider trading.

 

What happens to this margin of safety in a recession?  What is your thesis here?  That NIM compressions will cause a run on the bank?  That defaults will accelerate and cause write-downs that the banks haven't already prepared for?  Does your thesis apply only to BAC or to all US financials?

 

Management responds to Blodgett with a press release that equates to nothing more than name calling?  A poor response by BAC PR.  If they had just left out the part about Blodgett being banned from the securities industry, would you still say that there was no substance whatsoever in their response?

 

Munger, until you directly respond to legitimate questions and arguments, nobody is going to take you seriously at all.  Nor is anyone going to provide you with a detailed analysis of why BAC is undervalued at these levels. 

 

Your credibility is dropping just like BAC's price has over the last few months.

 

 

[Grenville]

 

 

I don't see it as an overnight turnaround by any means and I am getting more comfortable with management as time has moved along even though the stock price has gone lower. I think Moynihan is taking the right actions; pulling back on international credit card lending, trimming non-core investment stakes in Blackrock and potentially China Construction Bank. The bank will shrink itself to meet capital requirements in my worst case scenario.  Here is a synopsis on Moynihan from Fortune in July  if you haven't seen it already (http://bit.ly/nVlGTl). This is a quote I like from the article:

 

 

Great article on Moynihan. Seems like the right guy for the job.

[Munger]

Txlaw -- you are an emotional one.

 

How many times do I have to fully admit that I have no idea if the stock is a buy or a sell.  Too opaque.

 

"Massive buyback?  This indicates you know nothing about BAC.  To even suggest that BAC can buyback stock is ignorant."

 

Well -- I thought the question was rhetorical but since it flew right over your head, I'll ask directly.  Remind us again why BAC can't pay a dividend or buy back stock?  And why were BAC management assumptions rejected?  And why is BAC still not even considered a candidate to pay a dividend or buy back stock, despite management assertions the company is full capitalized with nothing but massive cash flows in the future?

 

"Management responds to Blodgett with a press release that equates to nothing more than name calling?  A poor response by BAC PR.  If they had just left out the part about Blodgett being banned from the securities industry, would you still say that there was no substance whatsoever in their response?"

 

Every aspect of the PR was a disaster -- there was nothing to it...

 

"Munger, until you directly respond to legitimate questions and arguments, nobody is going to take you seriously at all.  Nor is anyone going to provide you with a detailed analysis of why BAC is undervalued at these levels."

 

Again, the comment flew right over your head -- the point is that I have no opinion and no emotional attachment to a buy or sell on BAC.  If facts materialized showing the BAC represented a great buying opp, I'd be the first into the market, buying as much as I could.  I'm not looking for anyone to spoon feed me on BAC...if any analysis were possible with publicly available info, I'd have done it myself already. 

[txlaw]

Txlaw -- you are an emotional one.

 

How many times do I have to fully admit that I have no idea if the stock is a buy or a sell.  Too opaque.

 

"Massive buyback?  This indicates you know nothing about BAC.  To even suggest that BAC can buyback stock is ignorant."

 

Well -- I thought the question was rhetorical but since it flew right over your head, I'll ask directly.  Remind us again why BAC can't pay a dividend or buy back stock?  And why were BAC management assumptions rejected?  And why is BAC still not even considered a candidate to pay a dividend or buy back stock, despite management assertions the company is full capitalized with nothing but massive cash flows in the future?

 

"Management responds to Blodgett with a press release that equates to nothing more than name calling?  A poor response by BAC PR.  If they had just left out the part about Blodgett being banned from the securities industry, would you still say that there was no substance whatsoever in their response?"

 

Every aspect of the PR was a disaster -- there was nothing to it...

 

"Munger, until you directly respond to legitimate questions and arguments, nobody is going to take you seriously at all.  Nor is anyone going to provide you with a detailed analysis of why BAC is undervalued at these levels."

 

Again, the comment flew right over your head -- the point is that I have no opinion and no emotional attachment to a buy or sell on BAC.  If facts materialized showing the BAC represented a great buying opp, I'd be the first into the market, buying as much as I could.  I'm not looking for anyone to spoon feed me on BAC...if any analysis were possible with publicly available info, I'd have done it myself already.

 

Haha, I'm sure you have no opinion.

 

As I said, your credibility is approaching nil.  No point in continuing further, really.

[rjstc]

Munger; Please continue bad mouthing BAC. Also could you do a little more with C? I wanted to buy more BAC in the low 6s and C wasn't quite down far enough. Thanks for any help you can give.

 

[ERICOPOLY]

One or two conference calls ago Moynihan estimated that BAC earnings will normalize in 2013.

 

I believe at this time the community will be saying:

1)  bank loan pipelines are very strong after five solid years of lending

2)  banks are no longer doing the fancy things that got them into trouble

 

And my commentary on those who are getting the loans:

The workers who remained employed throughout the crisis survived the rounds of job cuts.  Those who have been unemployed long-term lose their skills and become relatively unemployable.  This further strengthens the relative worth of the employees who retained their jobs.  Lastly, the employees who retained their jobs are the ones that BofA has been lending to.

 

So it's unsurprising that 2013 would be the year of normalized earnings.