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Did Bank of America Just Prove Everyone Right?

Many investors believe it's impossible to understand and value a bank like Bank of America. When Bank of America disclosed on Monday that it had found an error in its internal accounting practices, the argument of the bank being a "black box" seemingly grew stronger.

In the following episode of Where the Money Is, banking analysts Matt Koppenheffer and David Hanson bust the myth that says investors should "sell in May and go away," dive into Bank of America's latest issue, and try to stump each other's investing knowledge in a round of "Stock Quiz." Matt believes the mistake 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 assets and liabilities. Is the latest mistake a reason for banking "bulls" to finally admit that banks are too complex to be winning investments?

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Read/Post Comments (6) | Recommend This Article (2)

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  • Report this Comment On April 29, 2014, at 2:13 PM, mangledlifestyle wrote:

    B of A new corporate slogans: "Safety, Soundness, Service-- we're 0 for 3 and still have your business" -- "We're smaller than you think--just ask our accountants" -- "So large we have to charge" -- "Too Big to Fail and Too Big to Care"

  • Report this Comment On April 29, 2014, at 4:28 PM, funfundvierzig wrote:

    mangled, we enjoyed your wit.

    Here are a few more tags aping Bilk of America's own PR slogans:

    "A Global Company With Loco Focus"

    "World's Fraudest Financial Service Company"

    "We Work To Subtract Value"

    "Misdelivering For Our Clients Worldwide"

    "Nothing Succeeds Like Failure at Our Bank"


  • Report this Comment On April 29, 2014, at 7:52 PM, Obadiah wrote:

    The truth hurts. And, the problem for Bank of America, it's investors , the market and economy is that Bank of America committed fraud and violated dozens of federal criminal and civil laws rules and regulations across virtually every sector of their business. This is proven through the massive lawsuits filed and already settled by BOA related to bank account and credit card practices, mortgage backed securities sales and servicing, federal housing, and overdraft fees. The FANNIE MAE et al Countrywidec securitization scandal cost BOA over $25 billion including the 13.5 billion in fines added to the $9.5 billion settlement and likely fees and costs . And let's not forget the $10 billion AIG lawsuit and the $8.5 billion big investor case paid by BOA over securitization scams. And ALLSTATE seeks $1 billion for a similar case.

    All of these cases combined pale in comparison to the FDIC case against BOA for blatant manipulation of the LIBOR interest rates that caused 38 banks to file bankruptcy constituting serious criminal Anitrust violations -- affecting a $300 Trillion market. And why is Walll Street not focusing on the FDIC LIBOR case in valuing BOA as an investment.

    You must admit that if a medium sized or small bank engaged in BOAS conduct it would have been forced into receivership involuntarily and liquidated.

    Last but not least , why has no one sued BOA for servicing and collecting mortgage payments on the millions of Countrywide loans that FANNIE Mae proved BOA has no interest in. And why isn't every mortgage statement mailed by BOA to homeowners to collect such payments not federal mail fraud ?

  • Report this Comment On April 29, 2014, at 8:12 PM, Obadiah wrote:

    PS . How many people became homeless or committed suicide when forced out of their family home based on foreclosures BOA and it's lawyers had no legal basis to file. That blood and emotional distress is on the hands of BOAS executives and Board-- over money. "Bank of America "? The negative global perception on this nation cannot be measured by BOAS wrongdoing. Why should such an evil institution be able hold itself out as " Bank of AMERICA"?! --- right down to its red white and blue American flag trademark .

  • Report this Comment On April 29, 2014, at 10:20 PM, funfundvierzig wrote:

    Bank of America is nothing short of a racketeering enterprise of monstrous proportions. Why no prosecution under RICO? ...funfun..

  • Report this Comment On April 30, 2014, at 7:37 PM, Hansen wrote:

    Bank of America Global Banking segment saw revenues rise 6.6% over the last one year to $2.3 billion in first quarter FY14.

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David Hanson

David has been with The Motley Fool since 2013. He is a graduate of the University of Miami. Follow David on Twitter for all things finance, marketing, and investing.

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