Aug 05, 2011
Will its real estate holdings doom Bank of America?
05 Aug 2011
Posted by Andrew Kantor
Yves Smith at Naked Capitalism thinks B of A’s RE holdings might be too much for the financial giant. He writes:
It is clear that the Charlotte bank has too much in the way of legal liability that it will not be able to shed and yet-to-be-taken writedowns on balance sheet items (for instance, roughly $125 billion of home equity loans and junior liens on residential real estate as of end of last year) for it not to be at risk of a death spiral.
The post is long and detailed — plenty to chew on for you financial geeks.
Click here to read “Bank of America Death Watch.” (Yeah, the title is a bit over the top, but who knows?)
A related Bloomberg story, “Bank of America Says Mortgage Buyback Claims May Exceed Prior Estimate,” quotes Tony Plath, a professor of finance at the University of North Carolina in Charlotte: “I don’t think it’s anything nefarious, it’s just that they don’t know what the magnitude of losses in that portfolio will be.”