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Monday, July 6, 2009

Bank of America Loses More Money, Obama Will Regret Fake Stress Test

FN: The banks aren't done yet with the write downs and losses. Not by a long shot. Now that the unemployment rate is approaching double digits, with the heavily massaged NFP number at 9.4%, expect much more pain at the banks.

They really should have done an ACTUAL stress test. The fake one will come to haunt the Obama administration sooner rather than later. When the TARP money finally runs out AND bank failures actually accelerate, it will be difficult or even impossible to convince the American public to fund another massive bailout party. If a bank that received TARP money implodes and needs more, that will be bad enough. However, if a bank that received and then RETURNED TARP money implodes, things might finally hit the boiling point with Joe Sixpack. With nothing left to lose, the masses might actually make some noise and cause a ruckus. That is why a real stress test would have been so useful.

Reality always trumps fantasy. Eventually.

Bank of America’s Bad Loans Top $7 Billion, Credit Suisse Says: "Bank of America Corp., the largest U.S. lender, faces a 10 percent jump in uncollectible loans to $7.6 billion when it reports second-quarter earnings, Credit Suisse said in a report today.

Bad debts included $1.9 billion tied to home equity, and about 10.4 percent of credit card loans will be written off, analyst Moshe Orenbuch wrote in the report dated today. The bank, based in Charlotte, North Carolina, charged off $6.9 billion of loans in the first quarter, he said.

Bank of America, first in the nation by assets and deposits, will report a 32-cent a share profit for the quarter, including a $5.2 billion pretax gain from the sale of China Construction Bank Corp. shares, Orenbuch said. Excluding that gain and a $750 million assessment to bolster the Federal Deposit Insurance Corp.’s insurance fund, the bank probably lost 15 cents a share, Orenbuch wrote."

9 comments:

Expected Returns said...

The bogus stress tests assumed an adverse unemployment scenario of 10.3% by the end of 2010.That number will look quite laughable in a year.

JeffreyLin said...

I'm not sure Obama will care but the american people will sure regret letting them make a fake test

buttsqrt said...

"However, if a bank that received and then RETURNED TARP money implodes, things might finally hit the boiling point with Joe Sixpack."

this should read..."However, if a bank that received and then RETURNED TARP money, then gave out massive bonus, then implodes, things might finally hit the boiling point with Joe Sixpack.

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Anonymous said...

What makes you think they didn't do a classified "real" worst case stress test? They are just trying to but time, hoping that everything works out well. Sounds like the surge and Bush returning.

Anonymous said...

Sorry, Joe Sixpack is so high on entertainment he wouldn't know the remote from the beer bottle. you might get another Fox run tea party.

Anonymous said...

There are plenty of consumer comments that can be found on Pissed Consumer.

Bank of America has created a lot of upset people. It is starting to show. Please check out Bank Of America complaints on other sites.