Rebel Traders – Analysis Without The Hype

Bank of America charged with civil fraud

Ney York attorney general Andrew Cuomo filed civil securities fraud charges against former Bank of America CEO Ken Lewis along with the former CFO.

The charges allege that they (Ken Lewis and the CFO) decided not to disclose mounting losses at Merrill Lynch before getting the approval from the shareholders to acquire the firm in the shotgun wedding. Separately, the Securities and Exchange Commission (SEC) reached a deal to settle allegations of misleading investors and Bank of America will pay penalties of $150 million. The new settlement still requires a judge’s approval.

The new charges brought on by NY Attorney General are civil fraud charges. If found guilty, then former CEO Ken Lewis and the CFO may face more than just ‘a fine’

Remember the MOVE YOUR MONEY movement which I strongly support.

The full complaint can be read below:

Andrew Cuomo’s Lawsuit Against Bank of America and Ken Lewis

Some of the major banks issued their monthly ‘master trust’ data yesterday. This data reveals the the amount of money that is delinquent, and the amount being charged off. It is still a mind boggling amount of money that is delinquent. Consumers are fine? I don’t think so.

Citigroup Inc Reports Dec Master Trust; Net Charge offs 9.56% v 10.29% m/m

- 5-34 days $2.5B v $2.49B m/m
- 35-64 days $1.17B v $1.22B m/m
- 65-94 days $972M v $979.8M m/m
- 95-124 days $869M v $872.7M m/m

American Express Co Reports Dec Master Trust; Net write offs on managed basis 7.1% v 7.6% m/m

- Annualized default rate net of recoveries 6.9% v 7.5% m/m
- 30 days past due loans on owned basis 3.7% v 3.9% m/m
- 30 days past due loans on managed basis 3.7% v 3.9% m/m

JPMorgan Chase and Co Reports Dec Master Trust; Net charge offs 7.11% v 8.81% m/m

- Delinquencies 4.94% v 4.90% m/m
- 30-59 days 1.13% v 1.23% m/m
- 60-89 days 0.99% v 1.12% m/m
- 90+ days 2.82% v 2.55% m/m

Bank of America Corp Reports Dec Master Trust; Net Charge offs 13.53% v 13.00% m/m

- Delinquencies 7.44% v 7.69% m/m
- 30-59 days $1.62B v $1.78B m/m
- 60-89 days $1.44B v $1.48B m/m
- 90-119 days $1.25B v $1.33B m/m
- Total delinquencies $6.72B v $6.93B m/m

Discover Financial Services Reports Dec Master Trust: Net charge offs 8.68% v 8.98% m/m

- Delinquencies 5.49% v 5.68% m/m
- 30-59 days $529.7M v $545.6M m/m
- 60-89 days $432.6M v $456.8M m/m
- 90-119 days $401.3M v $402.9M m/m
- Total delinquency amount ending balance $2.08B v $2.09B m/m
- Gross charge offs 9.64% v 9.91% m/m

Capital One Financial Corp Reports Dec Master Trust; Net Charge Offs 10.14% v 9.6% in Nov m/m – filing

- US Card 30 day+ delinquency rate: 5.78% v 5.87% m/m
- International Net charge off rate: 9.58% v 9.50% m/m
- Auto finance metrics annualized net charge off rate: 5.68% v 3.67% m/m
- US Card managed receivables $60.3B v $60B m/m

Bill Maher PSA & Bank of America (BAC) enters wrong home.

Comedian Bill Maher has joined the bandwagon calling for all to end their abusive relationships.

And while talking about the banks how about this from Galveston, Texas:

GALVESTON — A West End property owner is suing Bank of America Corp., asserting its agents mistakenly seized a vacation house he owns free and clear, then changed the locks and shut the power off, resulting in the smelly spoiling of about 75 pounds of salmon and halibut from an Alaska fishing trip and other damages.

Dr. Alan Schroit filed the lawsuit Monday in the 122nd State District Court in Galveston against the bank with which he has neither a relationship nor a mortgage.

Schroit, a retired professor at M.D. Anderson Cancer Center in Houston, is suing for wrongful invasion of his house in the 4100 block of Green Heron Drive in the Pointe West subdivision.
He filed the lawsuit after he and Bank of America were unable to agree on a settlement, attorney Barry A. Brown said.

Bank of America officials on Friday said they had not had an opportunity to review the lawsuit and typically decline to comment on pending litigation. But the bank is familiar with the case. (Source: Galveston County News)

Today I received the following bit of news off the wires…

Thursday, January 07, 2010 7:19:57 PM
(US) According to a Sr. Obama Administration Official, Obama will make a statement on the economy at 2:40 PM EST

Well this means one of two things. The first is that the jobs report on Friday morning will be ‘better than expected’ and he will want to gloat how much the administration is doing. Or, the jobs report will not be all that great, and he will want to gloat how much the administration is doing.

Analysts expectations for Friday’s employment data is a mind boggling range of anywhere from -270,000 to +300,000, with the consensus for a flat (zero net gain) jobs data report. I encourage you to read the excellent article put together by Mish Shedlock on the massive 43% jump in emergency unemployment claims in just the past month. Mish, along with Tyler at Zero Hedge have put together some extremely interesting data concerning unemployment claims, and it does not paint a pretty picture.

Action in the market today was once again muted with the major indices ending mixed. Boeing (BA) and Bank of America (BAC) had parabolic type upward moves today which kept the Dow Industrial average in the green. Looking at these two charts these moves appear very unstable as each has penetrated the upper Bollinger band.

More after the jobs report in the morning.

Watch out! Bank of America is soon to be let loose once the TARP chains are cut. Announced this evening is that Bank of America will repay $45 Billion in TARP funds by using $26.2 Billion from its excess reserves, and essentially the remainder comes from throwing existing shareholders under the bus.

Bank of America Corp Confirms plans to repay entire $45B TARP funds (about 33% of market cap)

Under terms of the authorization from the U.S. Treasury and banking regulators to repay the $45 billion investment made under TARP, Bank of America will repurchase all 600,000 shares of the company’’s Fixed Rate Cumulative Perpetual Preferred Stock, Series N; all 400,000 shares of the company’’s Fixed Rate Cumulative Perpetual Preferred Stock, Series Q; and all 800,000 shares of the company’’s Fixed Rate Cumulative Perpetual Preferred Stock, Series R. The shares were issued to the U.S. Treasury as part of TARP. Bank of America is not exercising its right to repurchase the related warrants at this time.

Bank of America plans to repay the $45 billion in TARP funds using $26.2 billion in excess liquidity and $18.8 billion in proceeds from the sale of “common equivalent securities.

The $18.8 billion issuance of “common equivalent securities” would be treated as Tier 1 Common capital.  Shareholders would be asked at a special meeting to be held within 105 days of issuance to approve an increase in the authorized shares outstanding in order to allow the “common equivalent securities” to be converted into common stock.

The “common equivalent securities” carry warrants to buy a total of 60 million shares of common stock at $0.01 per share and other benefits if shareholders do not approve an increase in authorized common shares. In addition, Bank of America agreed to increase equity by $4 billion through asset sales to be approved by the Board of Governors of the Federal Reserve and contracted for by June 30, 2010. To the extent those asset sales are not completed by the end of 2010, the company agreed it would raise a commensurate amount of common equity.

Bank of America also agreed to raise up to approximately $1.7 billion through the issuance of restricted stock in lieu of a portion of incentive cash compensation to certain Bank of America associates as part of their normal year-end incentive payments.  After the TARP repayment and these initiatives, the company’’s Tier 1 Capital ratio would be 11.0 percent, pro forma based on the September 30, 2009 ratio of 12.5 percent. The Tier 1 Common capital ratio would be 8.5 percent, pro forma based on the September 30, 2009 ratio of 7.3 percent. The company will continue to have strong liquidity.

Repurchase of TARP preferred stock is expected to reduce income available to common shareholders in the fourth quarter by $4.1 billion, as the book value of the preferred is less than the amount paid.

Bank of America seems to be going to rather extraordinary measures to repay the TARP as quickly as possible. When banks still need to build up loss reserves here is BAC tapping into their piggy bank to pay off the Government. The timing of this announcement sure is interesting to say the least as it comes the night before Fed Chairman Ben Bernanke’s confirmation hearings.

Oh, in other Bank of America news:

NEW YORK, Dec 2 (Reuters) – Bank of America Corp <BAC.N> on Wednesday announced cash awards that could reach seven figures for three senior executives, including two whose salaries were cut after a review by White House pay czar Kenneth Feinberg.

On November 30, Thomas Montag, head of global markets and banking, was awarded stock units valued at $4.57 million, based on the bank’s Wednesday closing price of $15.65.

On the same day, Chief Financial Officer Joe Price received an award valued on the same basis at $2.58 million, while home loans and insurance chief Barbara Desoer got an award valued at $1.94 million. [...]

Do you hold a mortgage with Bank of America? Were you hoping to get a loan workout approved? With the TARP chain being cut you better watch out for they will have no obligations any longer to play nice. Watch out, Bank of America will be free to whore around like Tiger Woods all over again.

… well not really,  just sorry that they ended up in the media again for being a disgrace of a company.

Case in point: Jane Padgett had a credit card issued by Bank of America and had been a customer of theirs for nearly 12 years. Recently Jane discovered that her credit limit had been slashed in half and her purchase of medication for her pet was refused.

For the entire 12 years Jane was a customer of Bank of America she never missed one payment and always paid the balance due in full each time she used the card. The card, which carried a small $1,000 credit limit was apparently only used for large purchases where she did not have that much cash on hand at the time, but by the time the bill came due it was always paid off.

Jane contacted Bank of America to inquire about her card and was told that screening of her credit history (past history which did not pertain to BofA) revealed certain items which Bank of America claimed put her in a higher risk category and thus found cause to cut her credit limit in half. The items that Bank of America identified were explained in full by Ms. Padgett to the person at the bank when she called. But the bank did not want to hear any of it, facts about ones credit history did not seem to matter to Bank of America and then the bank simply canceled her account altogether apparently for complaining to the representative on the telephone as Ms. Padgett alleges.

The Bank of America representative on the phone told her that her limit had been reduced because of negative items on her credit report, some of which, Padgett tried to explain, were errors that had been recently expunged. But there was still a bankruptcy in 1994 (when her mom had cancer) and a late payment on a Macy’s card in 2007. The bank suddenly saw her as too risky.

According to Padgett, when she protested further, pointing out that she’d never made a late payment on the card in question, the Bank of America representative responded by canceling her credit card altogether — ending a 12-year relationship in which she’d done nothing but make full payments, and on-time, too.[...]

The day after Bank of America cut Ms. Padgett off completely the Huffington Post learned of the story and contacted Bank of America to make an inquiry into the story.

[...] a Bank of America spokeswoman told the Huffington Post that Bank of America would never cancel a card to punish a customer for griping.

“We do monitor accounts for risks and may adjust customer lines up or down as appropriate based on their risk profile based on their performance,” said spokeswoman Betty Riess. “We would not close an account just because somebody would call in about it.”

Padgett swears she was dumped in the course of a conversation. [...]

[...] Shortly after Huffington Post’s inquiry, Bank of America changed its tune, apparently realizing Padgett wasn’t such a risky borrower after all. A Bank of America rep called her at work, apologized, and offered to restore the account with the original limit. (It had nothing to do with a reporter’s inquiry, BofA told HuffPost.) [...]

It had nothing to do with the media getting involved… yeah right. Bank of America, along with so many of the other large bank institutions that have become wards of the tax payers are only concerned with their public image in my opinion.

Bank of America along with Goldman Sachs, JP Morgan, Citigroup, and many others must be allowed to fail and suffer the consequences. The notion that tax payers must keep propping up these zombie banks must end and end now.

Dylan Ratigan speaks about the Banks that have gambled and lost…

… and Bernie Madoff was a caring and honest man.

The Dow Industrial average reached 10,000 with CNBC staff wearing caps that read ‘DOW 10,000‘ and will run a “special” DOW 10,000 TV show this evening.

STOP THE INSANITY

The economy has not been saved, only disguised… akin to putting lipstick on ENRON years ago and calling it a great investment.

Banks and other financial institutions have only been able to report revenues because they no longer have to record ‘actual‘ losses, as long as they don’t sell it they can put whatever value on it they want. We have Congress and the FASB for that brilliant move.

Is Jamie Dimon (JP Morgan CEO) on ‘your‘ side?

Wednesday, October 14, 2009 9:38:07 AM

JPMorgan Chase and Co CEO Dimon: Consumer Protection Agency will be “damaging”; will cost customers.

Wednesday, October 14, 2009 9:38:07 AM

JPMorgan Chase and Co CEO Dimon:   Corporate lending continues to trend around all time lows, extended credit lines continue to be drawn at very light levels.

I guess CNBC ‘forgot’ to mention the bad parts

Don’t worry, President Obama has everything under control and will quickly move to solve this problem:

Wednesday, October 14, 2009 3:49:13 PM

White House: Pres Obama supports a $250 payment to seniors, veterans, and the disabled; program could cost up to $13B

- payment may include approx 57M individuals

The Securities and Exchange Commission (SEC) has said it will seek a trial by jury against Bank of America… Oh this warms the cockles of my heart!

Bank of America - Trial by Jury

As the ‘video of the day’ on the right hand side of my site details the circumstances, it is Karl Denninger who puts it into words very well.

[...] And this has nothing to do with the fact that I believe they’re hiding losses, that they’re under investigation 7 ways from Sunday regarding the Merrill merger, or that BofA likes to bang you in the backside with usurious “overdraft fees”, even though any of those standing alone is more than enough reason to run this bank into the ground.

Nope.

It is about this:

A South Carolina Bank of America branch is drawing criticism Thursday after an employee reportedly ordered the removal of American flags placed to honor a fallen Marine over fears that people would be offended.

The Palmetto Scoop received one eyewitness email claiming that the branch manager at Bank of America’s Gaffney branch at 1602 West Floyd Baker Blvd. “told a citizen who was preparing the route for a U.S. Marine killed in action in Afghanistan by placing small American flags along the roadway that the flags might upset some of her customers.”

Said the outraged tipster, “[The branch manager] took them down and made the citizen go in to get them if she didn’t want them thrown away.”

The flags were part of the funeral procession of Lance Corporal Christopher Fowlkes, 20, who died last week after an explosion in Afghanistan’s Helmand province.

Bank of America said:

“We want to ensure the community knows how deeply proud we are of the men and women who have sacrificed so much in service to our country,” the statement said. “The bank does fly the American Flag at our locations throughout the country and flags were displayed in front of our banking center in Gaffney the evening prior to our dedicated Marine returning home.”

A miscommunication in policy?  And flags were permitted to fly in front of the location the evening prior – when the bank was closed and no customers would see them – but not when it was open?

You can see Karl’s full post on his site HERE

Good article on the Merrill / Bank of America saga in this months ‘The Atlantic”

Last September, as Wall Street turned to rubble and panic threatened to come unleashed, Ken Lewis, the CEO of Bank of America, agreed to swallow Merrill Lynch, one of the country’s most toxic investment houses. The deal was not altogether voluntary; as details have slowly emerged, the coercive role of the Fed and Treasury has loomed larger. What exactly happened in the weeks leading up to the merger? Did the deal save us all from economic apocalypse? And what does the government’s unprecedented role in it portend for the future of our economy?

The full story can be read here…

RebelTraders Editorial: Bank of America should be dismantled and sold for scrap, maybe this way the tax payers can get back the $45 Billion that BofA still owes us. For the record I support all boycotts of banks who have been living on tax payer funding which includes BofA

After Ken Lewis is out of a job we need to fire Vikram Pandit of Citigroup. With the tax payers owning a large portion of these corporations I say we fire these CEO’s immediately.

Editorial note by Chuck: Bank of America and Citigroup (both being propped up by tax dollars) are disgusting companies and need to be dismantled. Have a checking account at one of these banks? Take it elsewhere, don’t give them your business. Find a small local bank that is ‘not’ being propped up by TARP funds or other forms of government aid.