BOA DEATHWATCH: ANALYST SAYS BOOK VALUE IS LESS THAN ZERO

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ANALYSTS STARTING TO LOOK AT ALL SECURITIZED DEBT: CREDIT CARDS, STUDENT LOANS ETC.

Reggie Middleton at http://www.zerohedge.com has come to the same conclusion I have, which is only to say that we agree with the real experts like Simon Johnson. The Mega banks are broke — or even worse, and the resulting claims on the FDIC could be devastating not only for the agency, the shareholders of those companies and the creditors, but for the depositors who think their money is safe. The money market funds are not insured, and the rest has limits.

Now that analysts are actually peeking under the hood and drilling down on these “assets” on the books of BOA, they are finding nothing but dust. The exposure to naked hedge products sold by BOA to bolster its earnings is huge. They all represent liabilities that are coming home to roost as we read and write this.

The question that comes up in mind is that if the analysts are looking into the books of BOA and finding dust, why are the courts treating BOA as though those assets were real and that the Bank has any right to be foreclosing? The fact remains that BOA, through its awful acquisition of Merrill Lynch and its beyond belief acquisition of Countrywide, has acquired liabilities for which there isn’t enough money in the world to fix.

Which brings us back full circle to the idiotic question of why we are allowing the middlemen to dictate the terms of settlement between investor lenders and homeowner borrowers? The markets are placing an extreme low value on those “assets”. What do they know that the Courts don’t? It might just mean that the answer to this mess lies in the marketplace rather than the courts, the legislative branch of the executive branch of government. We’ll see. But a quick glance at the markets will tell you that all loans, from alleged mortgages to credit card to student loans are suspect as to their current validity or ownership.

If the marketplace is saying that the actual value of the Packages” of these loans is a tiny fraction of the “Amount due” (nominal value) of these loans, then someone has put pencil to paper and calculated that the huge discount in the marketplace has nothing to do with defaults. It has everything to do with whether the loans are collectable by the companies claiming them as assets. The marketplace is saying, no, we don’t think so. The courts might want to take take their cue from the marketplace on this one and leave the legal argument out it.

Analysts are voting NO to the proposition that these companies, whether financial institutions or not, actually own the debts they claim as assets. The equity valuation of the companies themselves continues to suffer as well as the nearly stopped trading in these derivatives. Let’s start with reality and take it for a test drive.

 

4 Responses

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  2. Well — rose today — because Euro crisis — apparently “resolved.” Oh — with no real documented plan. Last I heard — austerity by changing retirement age to 67 — by the year 2026. A Professor said — “that will do it!!!!!” by the professor — LOL

    The one percent keeps going up — with no resolution for the 99%.

    But to the occupiers — the real crux is housing. No fix for the 99 without fixing of the mortgage fraud. To the 46 state AGs that support settlement without investigation — no resolution of economy without resolution of mortgage fraud. To the 99 — focus on mortgage fraud.

  3. Good for you, kick! What does your sign say?

  4. Greetings to all from Occupy SF !!!

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