Last month, Bank of America shareholders rejoiced after the bank announced it would raise its annual dividend by 400% from $0.05 to $0.20 and commit to buying back more than $4 billion worth of its common stock. However, Bank of America recently disclosed it would be suspending its capital plans and resubmitting to the Federal Reserve for approval following a realization the bank made a mistake in the way it categorized structured notes it assumed when it acquired Merrill Lynch in 2009.
In the following segment from an episode of Where the Money Is, banking analysts Matt Koppenheffer and David Hanson discuss Bank of America's latest issue and what it means for the broader financial sector. Matt believes the issue at Bank of America says as much about the Federal Reserve and its stress testing methods as it does about Bank of America's inability to correct account for its capital. Valuing a bank can be tall task, should investors even try?
David Hanson has no position in any stocks mentioned. Matt Koppenheffer owns shares of Bank of America. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. 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. The Motley Fool has a disclosure policy.