Bank of America Admits to Hiding Debt

New details have emerged from a letter that Bank of America sent to the Securities and Exchange Commission (SEC) where the bank admits to hiding debt.

The letter was in response to an SEC inquiry to all major financial institutions following the discovery that Lehman played games with hiding debt in what Lehman classified as ‘Repo 105’ transactions. What Lehman was found to have been doing before their demise was essentially moving debt off of the books prior to earnings statements by reclassifying certain assets. And it was this activity that the SEC was looking into at other financial firms.

Bank of America’s response to the SEC states that they “mistakenly” hid debt in six separate transactions.

Bank of America Corp. admitted to making six transactions that incorrectly hid from view billions of dollars of debt, following a bid to cut the size of a unit’s balance sheet and meet internal financial targets.

The disclosure, made in a letter to the Securities and Exchange Commission, comes as the agency prepares to unveil the results of an inquiry into banks’ accounting for borrowing deals known as repurchase agreements, or "repos."

BofA’s letter was sent in April in response to the inquiry, but this is the first time the details of the six trades in question have been disclosed. The bank had acknowledged in its last quarterly report that its accounting for the transactions, made at the ends of quarters from 2007 to 2009, was incorrect.

The bank’s disclosure also suggests the trades may be an example of end-of-quarter "window dressing" on Wall Street, in which banks temporarily shed debt just before reporting their finances to the public. The practice, which The Wall Street Journal has uncovered in a series of articles, suggests the banks are carrying more risk most of the time than their investors or customers can easily see, and then juggling it during quarter-end reporting of financials. {…}

Window dressing is as old as Wall Street. But what Bank of America has done is commit fraud in my opinion. Companies moving funds around within the company to clean up the balance sheet prior to earnings is common, but when it is done without disclosure in the financial statements then it is fraud plain and simple.

In its letter to the SEC, which has been posted as a regulatory filing, BofA disclosed details of how it erroneously classified some short-term repos as sales when they should have been classified as borrowings over the past few years {…}

{…} In the letter, the bank said its incorrect accounting for the six trades wasn’t intentional. "We do not deliberately structure transactions that are economically disadvantageous simply for the purpose of recording a sale or reducing recorded liabilities." {…} (WSJ)

Oh come on Bank of America, do you really expect intelligent people to believe that those transactions, which made Bank of America’s balance sheet look a little better than it actually was is just an oversight?

When one cockroach is discovered it usually means there are hundreds in hiding. Did former CEO Ken Lewis retire because he knew about the cockroaches and wanted to get out before someone turned on the lights?

Occam’s Razor – The simplest explanation is usually the correct one




More on this topic (What's this?) Read more on Bank of America, Lehman Brothers at Wikinvest

Bank of America and Citigroup Hid Billions of Dollars of Debt

They claim it was an oversight, a miscalculation. Yea, and I have a bridge in Antarctica I am selling.

Bank of America Corp. and Citigroup Inc. incorrectly hid from investors billions of dollars of their debt, similar to what Lehman Brothers Holdings Inc. did to obscure its level of risk, company documents show.

In recent filings with regulators, the two big banks disclosed that over the past three years, they at times erroneously classified some short-term repurchase agreements, or “repos,” as sales when they should have been classified as borrowings. Though the classifications involved billions of dollars, they represented relatively small amounts for the banks.[…]

In my opinion this was no oversight, it was not a calculation error. This was REPO 105 all over again, the shuffling of money prior to earnings announcements.

[Read more...]




More on this topic (What's this?) Read more on Bank of America, Citigroup at Wikinvest

Foreclosures Rise Significantly

According to RealtyTrac, the March foreclosure filing were the highest in the reports history.”

Latest data from RealtyTrac:

March Realtytrac Foreclosure Activity M/M: +19% vs. -2% in Feb; Y/Y: +8% vs. +6% in Feb

- According to RealtyTrac, the March foreclosure filing were the highest in the reports history.
- Q1 foreclosure activity +7% q/q, +16% y/y (One in every 138 U.S. housing units received a foreclosure filing during the quarter).

- Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March; One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009; This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.

- As it has for the past 13 quarters, Nevada continued to document the nation’s highest state foreclosure rate in the first quarter of 2010. One in every 33 Nevada housing units received a foreclosure filing during the quarter, more than four times the national average and an increase of nearly 15 percent from the previous quarter.

- Arizona foreclosure activity in the first quarter increased on a quarterly and annual basis, helping the state to post the nation’s second highest state foreclosure rate for the third consecutive quarter. One in every 49 Arizona properties received a foreclosure filing during the quarter — nearly three times the national average.

- With one in every 57 Florida properties receiving a foreclosure filing during the quarter, the state posted the nation’s third highest state foreclosure rate for the second straight quarter.

- California foreclosure activity decreased 6 percent from the first quarter of 2009, but the state still documented the nation’s fourth highest foreclosure rate — one in every 62 housing units receiving a foreclosure filing.

- Utah foreclosure activity increased 75 percent from the first quarter of 2009, the highest annual increase among states with top-10 foreclosure rates and giving it the nation’s fifth highest state foreclosure rate. Foreclosure filings were reported on 10,756 Utah properties, a rate of one in every 88 housing units and an increase of 21 percent from the previous quarter.

- Other states with foreclosure rates ranking among the top 10 in the first quarter were Michigan, Georgia, Idaho, Illinois and Colorado.

And this from Bank of America

Bank of America receives over 125,000 calls per day from home owners seeking mortgage help.

125,000 per day!

Bank of America’s top mortgage executive, testifying today before Congress, will release sobering details of home-loan delinquencies, including that "hundreds of thousands of customers" haven’t made a payment in more than a year.

Barbara Desoer, president of the home loans unit, will update the Charlotte bank’s progress in mortgage modifications. She will offer suggestions for improving the federal modification effort and explain programs the bank is developing, including more help for unemployed and poor borrowers.[…]

Perhaps one of the most telling signs: The bank is fielding more than 125,000 calls a day from people seeking mortgage help.

[…] Bank of America expects a "considerable number" of customers to lose their homes in the next two years because of unemployment and the large number of homes now worth less than the balance on their mortgages, known as being "underwater."

Nationwide, some 11 million homeowners fall into this group.[…]

[…] The bank says the number of customers who won’t be eligible for modifications "will be significant" and is considering higher pay outs for those who leave their homes. The bank pays a minimum of $2,000 to offset moving expenses. (Source: Charlotte Observer)

How nice of them. The banks played a major role in creating the mortgage and housing bubble. And all they will do is offer $2,000 to help with moving expenses. Question is, move to where, Tent City, USA ?

Ed Note:  Bank of America: You are a disgusting POS, same goes to your friends Citi, Wells Fargo, and the rest of them. First you blow into the big housing bubble making it so big that it pops, now you just screw your customers a second time.

Banks win, Americans lose

More on this topic (What's this?) Read more on Foreclosure at Wikinvest

Bank of America – Ken Lewis Charged with Civil Fraud

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’

handcuffs Bank of America – Ken Lewis Charged with Civil Fraud

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

More on this topic (What's this?) Read more on Bank of America at Wikinvest

December Master Trust Data and Charge Offs

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

More on this topic (What's this?)
Could Millions of Homes Be Foreclosure Proof?
Germans don't trust the American economy
Read more on Trust at Wikinvest

Bill Maher On Abusive Relationships & Bank of America Screws Up (again)

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)

More on this topic (What's this?) Read more on Bank of America at Wikinvest

Pre Employment Data Friday Thoughts

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.

Boeing Chart bank of america stock chart

More after the jobs report in the morning.

More on this topic (What's this?)
Quote of the Day — Obama’s Tragic Flaw
Read more on Obama's Presidential Policy, Employment at Wikinvest

Bank of America (BAC) To Be Unchained – To Pay Back TARP

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.