Will Bank of America Blow Up?

Today I had the distinct pleasure to sit down with one of my favorite people to talk about the ongoing situation at Bank of America (NYSE: BAC  ) . He may not be the smartest person I know, but he's definitely the most... well, he's definitely the most something.

He's Fool contributor and banking analyst Matt Koppenheffer, also known simply as "me." So, without further ado:

Matt Koppenheffer 1: Matt, thank you so much for taking the time to sit down with me today to talk about this very troubling situation.

Matt Koppenheffer 2: These are troubling times, so I'm happy to do it.

MK1: Well, let's get right down to brass tacks here. What do you see happening at B of A? Based on the big declines in the stock price, the market seems to be expressing very little confidence in the bank.

MK2: Precisely, and I think the market is absolutely right. It has become quite clear that B of A will go the direction of Lehman, and will soon enter the books as the largest financial-company blowup in history.

MK1: What specifically do you see transpiring for this to come about?

MK2: Obviously, B of A is in store for an incredible amount of additional losses. Based on my calculations, Bank of America is set to lose roughly $2 trillion in the near term. With just $222 billion in shareholders' equity, and $2.3 trillion in total assets, this would absolutely wipe the bank out.

MK1: That is an incredible number! Your loss expectations far exceed anything I've seen so far. Do you mind sharing with us how you got there?

MK2: Absolutely. I started with goodwill and intangible assets, which are clearly worth nothing, so that's an $80 billion loss right off the bat. I have no idea what they mean by "other assets," so I assume that half of that will disappear, which would be another $87 billion. We all know that Goldman Sachs (NYSE: GS  ) beats everyone when it comes to trading, so I assume that three-quarters of B of A's trading account will disappear. That's another $148 billion, which brings us to $315 billion.

From there, we wipe out $13 billion of mortgage servicing rights. I mean, come on, we all know the housing market is over, period. Derivative assets? Those are very dangerous, so I assume that the bank will lose 15 times the $67 billion on its books, which tacks on another $1 trillion in losses. Ever heard of a little thing called "off balance sheet assets?" Silent killers, they are -- another $500 billion there.

Lastly, U.S. interest-bearing deposits will take a hit because of the awful U.S. economy, which tacks on a final $162 billion.

MK1: I'm speechless. I don't even know where to start. U.S. interest-bearing deposits are a liability, not an asset, so I don't even understand how Bank of America would report a loss from that. It sounds like you pulled the off-balance-sheet number out of thin air. As for the rest of it, those numbers all sound like gibberish. Do you have any real justification for the calculations that you used?

MK2: Justification? I just read a few of the recent reports and blog posts about Bank of America, and I assumed that I simply needed to grab large numbers from its balance sheet, then use random math to come up with the largest losses possible. Is that wrong?

MK1: I think this interview is over. Do you have anything of real substance to say about Bank of America before I let you go?

MK2: Tupac isn't dead -- former B of A CEO Ken Lewis kidnapped him, and the two of them are making a record in Costa Rica. Oh, and after he got Ken Lewis to agree to buy Merrill Lynch at a massive premium, John Thain also got Lewis to agree to keep a life-sized gold statue of a shirtless, flexing Thain in his office.

MK1: This has clearly been a waste of time.

Back to reality
There have been a lot of scary numbers thrown around with regard to Bank of America lately. As far as I can tell, a lot of those numbers have been derived through a process like the one above: using random math on big numbers from the bank's balance sheet. I'm not going to tell you that there isn't more trouble ahead for B of A, but I am very skeptical of some of the sirens I've heard sounding lately.

The opacity of B of A's balance sheet makes it very difficult to figure out what the assets are really worth. However, those with bearish cases only have the same opaque statements to work with -- unless, of course, they have inside information, which I don't believe any are claiming.

With regard to the comparisons to Lehman and Bear Stearns, and the concern about the stock price and the market's confidence in particular, the comparison only goes so far. Yes, it hurts badly when the market loses confidence in you, but like JPMorgan Chase (NYSE: JPM  ) and Citigroup (NYSE: C  ) , Bank of America is a major deposit-holding institution, so its major financing sources are very different than Lehman's or Bear Stearns'. The balance sheet leverage at Bank of America is also nowhere near what it was -- or what Lehman's or Bear's was -- back in 2008.

Though I own a small position in B of A, you're not going to catch me being particularly bullish on the stock -- there are too many unknowns for that. However, when I start to see random small-f foolishness being thrown around, I can't help but call it out.

If you're using the craziness of the recent market turmoil to do some stock shopping, I don't think B of A is among your best bets. However, I think almost everybody can find something that they'd like in our free report "13 High-Yielding Stocks to Buy Today."

The Motley Fool owns shares of JPMorgan Chase, Bank of America, and Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of Bank of America, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


Read/Post Comments (82) | Recommend This Article (80)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 24, 2011, at 11:05 AM, BigDaddyMiami wrote:

    You realize that everyone out there is beyond nervous and probably won't even get to the end of the article to get out of BAC.

  • Report this Comment On August 24, 2011, at 11:12 AM, BigDaddyMiami wrote:

    Though I appreciate and enjoy your wit, I would kindly ask that you not recreate War of the Worlds when it comes to the largest bank. I am not trying to lecture here, because I am a chronic wiseguy as well. However, since there is, at least some, risk of depositors freaking out, please save your role playing for something a bit less critical to the basic economy.

    Most Kindly Requested,

    BigDaddyMiami

  • Report this Comment On August 24, 2011, at 11:21 AM, Teacherman1 wrote:

    Thanks Matt.

    I want to buy BAC again, but I'm waiting for it to get under $6.00. $5.99 would be fine.

    Hopefully your article will drive it back down.

    I made over 200% on it in 2009, and it looks like I will have a chance to repeat.

    Great "spoof", but not far off from many of the other things that have been "said" of late by to many "prognosticators" flying by the seat of their pants.

    Have a great day.

  • Report this Comment On August 24, 2011, at 12:20 PM, TMFKopp wrote:

    @BigDaddyMiami

    Thanks for your thoughts.

    Try not to think of this as shouting "fire" in a crowded theater, but rather singing "the size of the fire may have been greatly exaggerated" in a comical, Broadway-show-tune fashion.

    Also, the market clearly cares a lot more about what Meredith Whitney had to say today than what I (either one of me...) had to say.

    Matt

  • Report this Comment On August 24, 2011, at 12:20 PM, mikecart1 wrote:

    This article is a disgrace to this site. You are spreading rumors for your own financial gain. Telling everyone that Bank of America is going to be destroyed like Lehman Brothers is terrible. Many of us like myself have lots of money in BAC and what you did is questionable ethically to say the least!

  • Report this Comment On August 24, 2011, at 12:22 PM, TMFKopp wrote:

    @mikecart1

    I really hope you're being sarcastic.

    Matt

  • Report this Comment On August 24, 2011, at 12:24 PM, marketmaker2100 wrote:

    BAC will head back up to $16 in a couple of quarters (http://www.icIncome.com/stock/BAC). Although I admit that I am nervous about BAC in the short run, you'll at least double or triple your money if you buy in now. I'm actually going to add it to my CAPS! :-)

  • Report this Comment On August 24, 2011, at 12:32 PM, j18a21g wrote:

    Matt, You are playing with fire. You pen an article that would get the SEC on your back and then say--Just Kidding. This kind of crap reporting, to get add clicks, is why I canceled My Fool subscription long ago.

    JJM

  • Report this Comment On August 24, 2011, at 12:36 PM, ratloko wrote:

    @bigdaddymiami

    I disagree completely.

    It is immoral to let a sucker keep his money a wise man once said.

    Take advantage of the market to pick up great companies!

    Great Post Matt!

  • Report this Comment On August 24, 2011, at 12:39 PM, millsbob wrote:

    Matt, i think the numbers have spoken. add me to them.

    nice writing; poor judgement.

  • Report this Comment On August 24, 2011, at 12:45 PM, jpints wrote:

    Wow.

    For everyone bashing him over this piece, take a moment to think. Read the disclosure, he owns no shares. Then read the damn article, you will see that all he is doing is saying a lot of the numbers being thrown around are artificially created.

    Since when has it ever been "unethical" to express your opinion in a stock (which by no coincidence he does not own)?

    And do you think the market cares what he has to say? Last time I checked today, BAC was up 7%...

    Stay Foolish Matt

  • Report this Comment On August 24, 2011, at 12:53 PM, asdfk123 wrote:

    I thought it was funny. Thanks Matt.

  • Report this Comment On August 24, 2011, at 1:05 PM, TMFKopp wrote:

    @jpints

    Just one quick correction there -- I *do* own shares of BAC. Which actually would make it even stranger for me to be trying to talk the stock down.

    Unless, of course, I'm a masochist that enjoys losing money...

    Matt

  • Report this Comment On August 24, 2011, at 1:17 PM, PhulishMortal wrote:

    Great article, Matt. Thumbs up!

  • Report this Comment On August 24, 2011, at 1:19 PM, jpints wrote:

    @TMFKopp

    Whoops, that was a bad error on my part, nevertheless the bulk of my comment still holds.

  • Report this Comment On August 24, 2011, at 1:23 PM, VossPiety wrote:

    The internet is in dire need of a specific font to designate sarcasm. Also, BAC is a pos, straight to zero :)

  • Report this Comment On August 24, 2011, at 1:31 PM, montecarlog5 wrote:

    A third of the way through and Im calling my broker...

    Great article, exact example of whats taking place on a daily manner. If you dont have anything intelligent to say simply keep your mouth shut.

  • Report this Comment On August 24, 2011, at 1:44 PM, mtf00l wrote:

    Even if this War of the Worlds scenario were remotely true, the Fed would be there to backstop any and all losses.

    They've done it before.

  • Report this Comment On August 24, 2011, at 1:57 PM, MaxTheTerrible wrote:

    Great article, Matt.

    The interview is a great example of what you can see on CNN/NBC/ABC/etc. everyday. Too much gloom and not much substance. Although you could hardly can call BAC an investment vehicle (since there's no way you can value the business with any degree of accuracy) at these prices it certainly makes an excellent speculative bet (which is why I also own shares in BAC and recently upped my position).

    Cheers!

  • Report this Comment On August 24, 2011, at 2:03 PM, TMFKopp wrote:

    @MaxTheTerrible

    "Speculative" is the key word there and exactly right. I keep a portfolio of beaten-down stocks (http://www.fool.com/investing/general/2011/06/16/5-stocks-fr... and that's where my BAC shares live.

    It's a basket approach, so if BAC goes to zero, it doesn't kill me, but I like the stock's risk/reward trade-off as a flier.

    Matt

  • Report this Comment On August 24, 2011, at 3:06 PM, plange01 wrote:

    actually there is nothing wrong with bac.a great stock to buy cheap!!!

  • Report this Comment On August 24, 2011, at 4:03 PM, John1256 wrote:

    Worst DC rates in the world. Ban subprime and no-doc home loans forever.

  • Report this Comment On August 24, 2011, at 4:47 PM, Joe4IZ wrote:

    A poor choice for such a serious topic. Do you joke when one of your friends gets cancer? If you want to be taken seriously by me in future, quit being so flip.

    Buy BAC if you want. I am staying as far away as possible.

    In the conference call they had, every analyst kept coming back to the Countrywide exposure...like every other question. No one knows what their exposure is. The stock won't turn around until they do.

  • Report this Comment On August 24, 2011, at 4:52 PM, Option1861 wrote:

    Two thumbs up great article! His point is very valid in this day and age you cannot rely on every Tom, Dick, and Harry with a Blog. Not every whistle blower / siren knows what he is talking about and he may not have all the facts.

  • Report this Comment On August 24, 2011, at 5:42 PM, wordjunkie wrote:

    This article needs to come down immediately. It is highly misleading to the casual reader, and not cute at all.

  • Report this Comment On August 24, 2011, at 5:51 PM, TMFKopp wrote:

    @wordjunkie

    I disagree completely on your assessment of the cuteness factor.

    Also, just to be clear, I assume you're defining "casual reader" as "a reader that doesn't read the entire article."

    Fool on!

    Matt

  • Report this Comment On August 24, 2011, at 5:53 PM, arizonamike303 wrote:

    You know I always did wonder what happened to Tupac...

  • Report this Comment On August 24, 2011, at 6:07 PM, lrsteele68 wrote:

    I find your article very interesting. I was at a financial conference last week and was talking to an instructor that deals with mortgage fraud, appraisal fraud and helps the feds in there cases. I heard similar problems with BofA. I stopped working with them a few weeks ago as I could see the writing on the wall. Another confirmation.

  • Report this Comment On August 24, 2011, at 6:08 PM, mikecart1 wrote:

    TMFKopp,

    I read through the article and I see where you disagree with what the person you interviewed said about Bank of America. This only comes towards the end of the article though and most people reading it would probably stop after reading the interview. The person you interviewed comes across as stating facts and the casual reader or investor would immediately panic or search for news related to that about BAC's collapse. Unlike other articles that try to suck you in and have you read to some key stock or selection of stocks or a learning take-away, this article is not appropriate in my opinion. Even though you disagree with what your interviewee thinks about BAC, it doesn't come until the last paragraph. This is why so many other members don't like this article - especially with everything going on with BAC in the news right now.

  • Report this Comment On August 24, 2011, at 6:09 PM, xetn wrote:

    I don't believe for one minute that BAC is really solvent, in the sense of FASB (Financial Accounting Standards Board) standards. They (BAC and many of the other too-big-to-fail banks have been given a pass as to the nature of collateral, etc. listed on their balance sheets. If they were forced back to using the FASB standards, they would have been deemed bankrupt and taken over. I believe this applies to several others as well.

    However, since BAC etal, are members of that great banking fraternity known as the Federal Reserve, they will be covered. That is because even if the FDIC wanted to take them over, they haven't the resources to do it. But the Fed can create all the money in the world and will undoubtedly stand behind BAC.

    My $.02 worth

  • Report this Comment On August 24, 2011, at 6:17 PM, TMFHousel wrote:

    <<If they were forced back to using the FASB standards, they would have been deemed bankrupt and taken over. I believe this applies to several others as well.>>

    I'd like to see how you calculated that. If BAC's assets were marked to FASB 107 fair value rules, it would take a $20 billion hit to equity, against a current stated equity value of $222 billion. That hit wouldn't even require it to raise capital, let alone be deemed bankrupt. It's all in the filings.

  • Report this Comment On August 24, 2011, at 6:21 PM, TMFKopp wrote:

    @mikecart1

    You do realize that the "interviewee" is me, right? I interviewed myself. That should be hint #1 that this may be tongue-in-cheek. I figured the Tupac kidnapping mention would help with that as well.

    And then there's this, and I mean this very seriously. If the breakdown of the "analysis" above -- that is, the write-offs that my "interviewee" is proposing -- do not immediately sound ridiculous to you, then I would recommend rethinking getting anywhere near Bank of America or any other bank stock. Truly.

    Matt

  • Report this Comment On August 24, 2011, at 6:23 PM, lipawe wrote:

    I have all my assets in Merrill Lynch which is now Bank of America. I don't know if I should pull everything out and go elsewhere. But where? The article was clever, but not appropriate for this site.

  • Report this Comment On August 24, 2011, at 6:26 PM, MaxTheTerrible wrote:

    @ wordjunkie, mikecart1 and all the others that find this article inappropriate.

    You are all joking, right? Not sure if I would call this article "cute", but it was definitely entertaining.

    Now, you all seem to imply that a "casual reader" would read only a half of the article and then run screaming all the way to his broker. I'm sorry, but this "casual reader" would deserve to loose his money if he/she is that retarded...

  • Report this Comment On August 24, 2011, at 6:29 PM, n4g4 wrote:

    I sold all my BAC stocks because of this article.

    Thanks for the heads up. Your skepticism of the interviewee is way off base. I think he's on to something.

  • Report this Comment On August 24, 2011, at 6:36 PM, Chopkoski wrote:

    Nice build up then scattered to the winds....

  • Report this Comment On August 24, 2011, at 6:38 PM, 102971 wrote:

    Terrible articles to come from a (supposedly) reputable source.

    I don't own any BAC; never have and are very unlikely to do so.

    I don't know how anyone can take you seriously any more.

  • Report this Comment On August 24, 2011, at 6:42 PM, 102971 wrote:

    If n4g4 sold stock based upon this article, he's a fool. Anyone who takes any action on the article is a fool - and NOT a Motley Fool. Do your own due diligence and then make a decision but don't act upon a stupid article like this.

  • Report this Comment On August 24, 2011, at 6:59 PM, rgperrin wrote:

    When I started reading this article, not realizing that it was a farce, my heart stopped beating and (I was later told), I slumped over, falling out of my chair, quite lifeless. Happily, my wife, who has medical training, heard the noise from down the hallway and was able to resuscitate me. After regaining consciousness, I pointed to the article, still on my computer's screen. My wife finished reading it aloud, about from where I left off, and my vital signs returned to normal by the time she reached the concluding paragraph.

    What you achieved, while not without humour or wit, reminded me of Orsen Wells's radio broadcast of "War of the Worlds."

  • Report this Comment On August 24, 2011, at 7:45 PM, ValueYankee wrote:

    The big problem with these Motley Fool Articles is that the informational content is essentially nil. Almost always they state the obvious.

    I have to learn to stop reading them.

    Sorry to pick on this one. All the articles have basically zero informational content, perhaps with some superficial numbers thrown in.

  • Report this Comment On August 24, 2011, at 7:54 PM, rgperrin wrote:

    Having now read all the comments on this article--about 40 or so--I would say that there is sufficient cause for Motley Fool to make some kind of statement (pro or con) on the wisdom of what it did. Job One, I should think, is to retain, thus be in tune and at peace with, your readership. From what I have read, a lot of people were really "put off" (to use the vernacular), even, though, honestly, clues that the article was a farce are apparent almost from the very beginning, that is, a man essentially cross-examining himself.

  • Report this Comment On August 24, 2011, at 7:58 PM, verable wrote:

    I never thought that you guys would have ever were able to write such a desinforming and bias article as this one. Keep doing it and soon you would have no subscribers.

  • Report this Comment On August 24, 2011, at 8:00 PM, TSIF wrote:

    +6,

    really sarcasm is a tough sell when people have lost all their sense of humor and their senses to go with it.

    I'm almost lost for words how people could take this serious, (and anyone who knows my reputation here on CAPS knows I'm never lost for words). If you're aware of the War of the Worlds and today's market and investors ability to "value anything" then you're living in constant sarcasm.

    WE need a little humor around here, but apparently without the "sarcasm font" it's hard for people to recognize it. I suspect that if there was an official sarcasm font that some of these posters still would have taken you seriously.

    There is NOTHING WRONG with a little sarcasm on an investment forum and no insitution too sacred to be a target.

    Besides, if anyone knew Matt's success rate of picking stocks lately they would just short him anyway! (JUST KIDDING)!!! ;)

    TSIF

  • Report this Comment On August 24, 2011, at 8:06 PM, sg1502 wrote:

    We pay hard earned dollars for your services and we have to work all day before we can try to research and make decisions on our money and our familie's security. You take an 8th grade cavilier attitude toward what's going on and how you influence people. you should be ashamed of yourself for the juvenile attempt of humor at our expense.

    YOU ARE AN IDIOT

  • Report this Comment On August 24, 2011, at 8:08 PM, TSIF wrote:

    MK1: So if the absolute worse occurs to BAC what do you estimate it's share price will be one year from now.

    MK2: Negative $62.00

    MK1: Do you mean $0.62 cents??

    MK2: No Negative $62 Dollars a share...clearly if you do the math and deduct everything on my list shareholders or the government will be subsidizing them!

  • Report this Comment On August 24, 2011, at 8:10 PM, donklos wrote:

    After reading the headline which was on the home page and right in there with all the other "legit" stories, and then reading the story, I honestly don't know what stories to believe. This is not a site I come to to be fooled, pun intended. You're playing with my money here.

  • Report this Comment On August 24, 2011, at 8:54 PM, HomieDontMess wrote:

    Awesome article. As a BAC shareholder I was nervous, then laughing, then optimistic.

  • Report this Comment On August 24, 2011, at 8:54 PM, MKArch wrote:

    Matt,

    I was wondering how the heck the investment community could get so worked up over a Henry Blodget blog until I read through the responses to your very funny article. All I have to say is Wow!

    I saw a head to head interview with Dick Bove and another analyst today (can't remember who) and the guy actually stated that the fed would force BAC to raise capital just because the market wants it. As I was thinking to myself what?????????, Bove cut him off and said that was the stupidest thing he ever heard. The sad part is this guy was taken seriously.

  • Report this Comment On August 24, 2011, at 9:12 PM, OPTIONNUT wrote:

    Matt,

    I think you need to stop drinking...like getting drunk

    on your own sarcasm. BAC has been shorted by the Pros and will return with a 2 or 3 bagger shortly.

    Once we get into Fall things will be apparent that BAC is a winner. Cheers, Matt!

  • Report this Comment On August 24, 2011, at 9:13 PM, warrenrial wrote:

    Very stupid.

  • Report this Comment On August 24, 2011, at 9:18 PM, richie54 wrote:

    Memorandum

    From: Donald Trump

    To: Matt Koppenheffer

    Date: 8/24/11

    You're fired!

  • Report this Comment On August 24, 2011, at 9:23 PM, pedigreebull wrote:

    great piece for light hearted relief!

  • Report this Comment On August 24, 2011, at 10:28 PM, skypilot2005 wrote:

    http://finance.yahoo.com/news/Bank-of-America-quashes-apf-84...

    August 24, 2011, 3:27 pm EDT

    Bank of America quashes merger talk in memo

    Bank of America tells employees that speculation of merger talks with JP Morgan is 'baseless'

    NEW YORK (AP) -- Bank of America Corp. has sent a memo to employees quashing speculation that it is in talks to merge with rival JPMorgan Chase. The bank called the speculation "baseless," and said it didn't "make practical sense."

    The nation's largest bank sent the memo on Tuesday as takeover talk swirled in the market after a few Internet blogs reported that it might be acquired by JPMorgan Chase & Co. In the memo, Bank of America also said the reports that it needs to raise at least $200 billion in additional capital to meet new regulatory capital requirements was also "wrong."

    Bank of America shares on Wednesday rose over 11 percent to $6.90.

    U.S. bank stocks have generally been falling since the middle of July because of fears that they could be hurt if European countries like Greece or Spain default on their debt. But Bank of America has been hit even harder, falling as much as 35 percent this month as of Tuesday's close.

    Many investors have been selling because they believe the Charlotte, N.C. bank will have to sell more stock to raise capital, which would dilute their stake in the bank.

    In the memo to employees, the bank reiterated that it will be able to meet new regulatory requirements without issuing more stock, echoing recent comment by its CEO, Brian Moynihan.

    The memo was sent to employees so they could be armed with facts to inform their clients and customers, said Jerry Dubrowski, a Bank of America spokesman.

    According to the memo: "At the end of the second quarter of 2011, (Bank of America) had $218 billion in total capital, which is almost twice as much as is needed for an adequately capitalized institution under current standards, and more than enough capital to run our business."

  • Report this Comment On August 25, 2011, at 1:40 AM, Nickman wrote:

    As a holder of 10,000+ shares of BOA and 58 years old I'm not sure how well I took this article, or want to take it. I really took a beating reading this article but not nearly the beating I have taken from its value from 5 years ago. I was hoping this stock and once decent dividends including other investments, some inspired by your suggestions, would help me thru my golden years. The day BOA goes out of business so does the country. It's really nice to know that I have busted my ass for years, never asked the government for a handout, invested in many American companies only to see the economy tank so bad that now my worth may never bounce back to little more than hopes of social security if it's still around in a few years. Maybe I'll move out of the country for a year, sneak back in and let the government take care of me like they do for so many that have never invested one dime in America. Maybe you guys at M. Fool can write and inspiring article on how to beat the system.

    Seriously guys, try to stay positive and true and no more ripping articles about BOA. You've had your fun with BOA and now it's time to find something positive to say about BOA. There is something positive to say, right? Many of us appreciate your unbiased approach to investments and candid comments. After reading many of the post about this article you might have tarnished your reputation of being a viable and reputable source of information concerning investments. Since I'm paying you for your expert advice I expect to see something more serious in future articles about BOA. Like you always say don't put your eggs in one basket. That goes for financial advisors as well.

    Keep up the good work, I think…

  • Report this Comment On August 25, 2011, at 2:48 AM, oxboro wrote:

    Going out of business? It could not happen fast enough for such a stupid bank.

  • Report this Comment On August 25, 2011, at 8:16 AM, Onigato wrote:

    <MK2: Justification? I just read a few of the recent reports and blog posts about Bank of America, and I assumed that I simply needed to grab large numbers from its balance sheet, then use random math to come up with the largest losses possible. Is that wrong?>

    If anyone manged to miss this line, they need to check the status of the f in their Fool. The entire article is a mockery, but in the proper Foolish way. The Fool is SUPOSSED to say the emperor has no clothes, but do so in a way that makes the entire room realize while never actually saying the words. This article does just that. The listeners may be offended, but they also learn to pay attention or be made fools.

    Loved it, Matt. Keep Foolin' around.

  • Report this Comment On August 25, 2011, at 8:22 AM, ravenesque wrote:

    Ask Ken Lewis if he knows anything about this:

    http://michaelfury.wordpress.com/2010/09/10/ghosts-in-the-ma...

    If so, he should testify at the Toronto Hearings:

    http://michaelfury.wordpress.com/2011/08/09/testify/

  • Report this Comment On August 25, 2011, at 9:08 AM, lovesstocks2 wrote:

    B of A has never been accused of using conservative accounting. They do use allowable accounting, and there is a difference, there are probably more surprises in store for this bank. Will it survive, its probably a 50/50 shot. Bank accounting, especially for the money center banks has been politically stretched for some time. The regional and small banks are required to use different accounting, and no, the filings don't cover that. Back when B of A was NCNB, things were far different, but those days are long gone.

  • Report this Comment On August 25, 2011, at 9:38 AM, MaxTheTerrible wrote:

    Well, well, well. According to Reuters, Berkshire Hathaway is to invest 5 Billion in BAC. So much for BAC blowing up.

    I just like my speculative bet so much more now!

    Cheers.

  • Report this Comment On August 25, 2011, at 9:38 AM, GeorgeBolter2 wrote:

    Ooops. Called that one wrong. Buffett is putting in 5 billion for perferred and options for 700,000,000 of common. Stock is up 28% in early trading. Thanks for nothing.

  • Report this Comment On August 25, 2011, at 9:40 AM, GeorgeBolter2 wrote:

    And a big ouch for anyone that shorted BAC...THE HOUSE OF PAIN...

  • Report this Comment On August 25, 2011, at 10:12 AM, MaxTheTerrible wrote:

    from a press release: "Berkshire Hathaway will also receive warrants to purchase 700,000,000 shares of Bank of America common stock at an exercise price of $7.14285" - can anybody guess how much Buffett will make on these warrants in five years? He's already up by more than 700M as of this morning...

  • Report this Comment On August 25, 2011, at 10:40 AM, kkensington wrote:

    HEY ALL YOU BIG TIME INVESTORS: This is how you all would have felt sitting on the deck of the Titantic while taking on water and the bow is getting ready to go under, but Ken Lewis and John Thain already are in a lifeboat by themselves rowing like hell heading for Costa Rica with the booty.

  • Report this Comment On August 25, 2011, at 10:50 AM, GeorgeBolter2 wrote:

    To Nickman-Jez I can not imagine your losses. You say you bought 5 years ago-the stock was in the 50's? It took awhile to get where the price per share is now. Why didn't you sell via a bottom line price before it got below $38? Yes you would have lost some-but not close to 90%...Unless you trusted someone to manage your money...If someone was advising you and not watching your portfolio, I would kick him in the nuts so he can feel a little of your pain. On a brighter note, I think the stock will rise again-but at this rate it will be a long time before it hit's the 50 range again. They are not like Apple where they can invent something to boost their bottom line AND crappy loan deals don't count.

  • Report this Comment On August 25, 2011, at 10:51 AM, asidpara wrote:

    I would definitely trust QWarren Buffett's judgement. Because of this article , I sold my holdings at a loss!

  • Report this Comment On August 25, 2011, at 10:59 AM, Teacherman1 wrote:

    Thanks Warren

    You just went and spoiled my $5.99 start price.

    Guess I will just have to be content with my 7 other bank stocks.

  • Report this Comment On August 25, 2011, at 11:03 AM, Pat4Ra wrote:

    How about similar article on Citi Group?

  • Report this Comment On August 25, 2011, at 11:04 AM, Option1861 wrote:

    Looks like Warren read the entire article and has an opinion of his own.

  • Report this Comment On August 25, 2011, at 12:50 PM, n4g4 wrote:

    Sarchasm : The gulf between the author of sarcastic wit and the person who doesn't get it.

    But you know, in all seriousness.... looking past the big stock uptick. What does this say about the current state of our financial institutions when such a big bank is "accepting" this kind of deal. Not so good.

  • Report this Comment On August 25, 2011, at 12:58 PM, TMFKopp wrote:

    @n4g4

    "Sarchasm"

    Haha. Amazing. Well played.

    Matt

  • Report this Comment On August 25, 2011, at 2:01 PM, BadMotherfooler wrote:

    I was going to pull out of BOA, but changed my mind

    - now she says she may be pregnant!

    (who else took this article seriously?)

  • Report this Comment On August 25, 2011, at 5:13 PM, DJDynamicNC wrote:

    "Sarchasm" :lol:

    Great article, great comments, and anybody who is upset about finding a silly or sarcastic article on a site called "The Motley Fool" may want to consider switching to "The Completely and Totally Serious Investor Who Never Makes Jokes," which is a domain name which is probably still available despite the assuredly high demand.

  • Report this Comment On August 26, 2011, at 11:36 AM, TMFKopp wrote:

    @DJDynamicNC

    Hilarious.

    And for anyone interested, I checked that domain on GoDaddy and TheCompletelyAndTotallySeriousInvestorWhoNeverMakesJokes.com ****is!!!***** available. It can be yours for just $12/year.

    Matt

  • Report this Comment On August 26, 2011, at 11:48 AM, ContraryDude wrote:

    Very thought-provoking article and interesting comments. Anybody who bought or sold BAC stock based on this article alone does not deserve to be an "investor". The Sarchasm widens!

  • Report this Comment On August 26, 2011, at 12:54 PM, Dyengii wrote:

    Matt,

    You clearly overestimated the intelligence of your audience - half of it anyway.

  • Report this Comment On August 26, 2011, at 1:03 PM, bmccrary wrote:

    Glad I read the entire article!

  • Report this Comment On August 26, 2011, at 2:12 PM, 123spot wrote:

    @lipawe 6:23 yesterday I was hoping some Fool would answer your question as I am in the same situation. Having been with Mother Merrill for 25 yrs, I am quite concerned. Everything I have is there and the relationship with my local office is invaluable to me. My emergency money is @BAC. I have found myself wishing that BAC would sell ML, but Moynihan disabused me of that hope in hs Berkowitz cc. I am not sure what to do except move my emergency money from BAC and cash, not investments from ML. I have been lazy about doing either because I have believed BAC is TBTF. Matt's article touched such a nerve in many, I think, because there a lot of others like you and me in the Foolish community. Would really appreciate an article addressing our concerns. Hysterical work by the way Matt. Really lit some hair on fire apparently. Just change your byline to "Swift" and Fool on! Spot

  • Report this Comment On August 26, 2011, at 11:20 PM, yaiwolf wrote:

    This type of article is why you can't take MF too seriously...really... for me I like a little more professionalism and less footle.

    No BAC position.

  • Report this Comment On August 27, 2011, at 5:32 PM, cttaylor wrote:

    When I heard Warren was investing 5 billion in it, I SOLD. After his comments about the rich paying more and supporting Obama, I have begin to lose faith in the man. This is not the only negative I have read about BOA and do believe they are going to get hit severely with toxic assets and if it goes down to what it did before, I will buy again. So far, I'm doing pretty good. I invested in another company that old Warren was selling and so far it's done real good. I invested in brk-b when it first came on the market and so far it's been a dud.

  • Report this Comment On August 28, 2011, at 1:07 PM, ndavis8726 wrote:

    Good point about understanding the numbers. I was particularly amused that Matt interviewed himself, then considered it a waste of time. Very funny! And people took this seriously? Perhaps I should invest that $12....

  • Report this Comment On August 29, 2011, at 5:54 PM, sueshe39 wrote:

    You hit the nail on the head - never mind Greece, its peanuts. B of A is symptomatic of trying to mask the real problem, that is to say us or the mess of the economy we inherited and the posturing in Washington fed by a stupid and self serving press....

    the decline of America is confirmed - sad but painfully true

  • Report this Comment On August 31, 2011, at 8:38 PM, marichel wrote:

    Jonathan Swift and Mark Twain did it well. You did not.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1543180, ~/Articles/ArticleHandler.aspx, 8/23/2014 11:32:24 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 14 hours ago Sponsored by:
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASD 4,538.55 6.45 0.14%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/22/2014 4:02 PM
BAC $16.13 Down -0.03 -0.19%
Bank of America CAPS Rating: ****
C $50.93 Down -0.14 -0.27%
Citigroup Inc CAPS Rating: ***
GS $175.47 Up +0.32 +0.18%
Goldman Sachs CAPS Rating: ***
JPM $58.49 Down -0.01 -0.02%
JPMorgan Chase & C… CAPS Rating: ****

Advertisement