Bank Of America Unprepared To Pay Billions, Outlook Dark For Shareholders

[link to m.seekingalpha.com]
Summary


BAC will likely pay at least $12 billion to settle government investigations by President Obama's Justice Department.
$12 billion is more than BAC’s 2013 net profit, which was the highest BAC has seen in six years.
CEO Brian Moynihan has been unclear how BAC will recover from this blow; we urge shareholders to consider selling BAC now.

______


An Extraordinary Case Hurts BAC Shareholders
The North Carolina-headquartered Bank of America is a stand-out case of government regulations as US prosecutors are asking approximately $17 billion-larger than the $12 billion BAC has offered, and significantly more than JPMorgan's prior settlement of $13 billion for similar troubles. JPM's settlement was the largest payout by a bank to date.



Another Painful Blow For BAC
If the settlement proceeds to the final stage, because of increasing pressure from the Justice Department, the bank will stagger under yet another great financial blow and the shareholders will have to wait for healthy dividends.

This fine is critical because, even in the case of a huge company like Bank of America, which is currently the second biggest bank in the country, one with the most assets and highest profitability, a settlement of around $12 billion is more that the bank's net profit as shown during the previous year, which came to about $11.43 billion.

What makes things particularly painful for the bank is that their profit represented the highest level of profitability ever reached during the span of a 6 year period- but now things seem quite out of control for the bank, and their future is unclear.





Bank, Shareholders Unprepared
Shareholders were expecting the settlement since April's quarterly profits announcement, but it seems that the bank was unprepared for such a hefty fine and suffered a great loss of money and face.

It is estimated that the fines are a result of accumulated past mortgage problems, according to probes conducted by Obama's aggressive Department of Justice.

During the course of the financial recession, the bank has doled out billions and billions for handling lawsuits and gaining back mortgage securities.

Obscure Outlook for BAC Shareholders

During a previous conference, Mr. Moynihan implied that things are pretty unclear regarding the finalized settlement. Intense negotiations between the two parties--top United States government authorities and the brain trust at this megabank--have already taken place but still, no final deal is in sight.

BAC posted poor Q1 results, and the outlook for Q2 looks dim.

More in link

Last Edited by Uncle Fuck Stick on 06/16/2014 08:56 AM