I’ve been saying it for three years. Bank of America and Citicorp are insolvent. They are bloated pieces of shit propped up by Bernanke and the American taxpayer. Using loan loss reserves and accounting gimmicks to appear solvent has been a farce. They have run out of tricks and will now attempt to screw your grandmother by charging her huge fees for the privelage of keeping money in their checking accounts that pay no interest. They should both be liquidated. A zombie banking system is what has led to a 22 year economic malaise in Japan. Help push this bloated pig over the edge. Don’t do any business with them. Bleed them dry. Bankrupt them before they bankrupt us.
Raising fees at BofA is a desperate move
By David Trainer
Recent news that Bank of America is considering jacking up its fees on basic checking accounts suggests the company is bad shape. As I wrote Wednesday, I believe BofA stock is headed back to its lows and today’s news confirms my view that the expectations basked into the stock’s valuation are writing checks that the company cannot cash.
In my opinion, there are four actions taken by financial services that signal the company is headed to serious trouble.
1. Management shake-up and major layoffs – lots of layoffs over the past year
2. Exploiting accounting rules to boost earnings – SFAS 159
3. Drawing down reserves to boost earnings: to the tune of $13.3 billion in 2011 and 2012
4. Bilking customers with new fees: tried it before and trying it again
Bank of America /quotes/zigman/190927/quotes/nls/bac BAC +0.26% has taken all four steps. Bilking customers with new fees is a desperate measure of last resort because it requires exploiting the one asset the bank has left, namely its customers.
BAC’s business model is broken now. Without the bubble-level profits from investment banking and trading to subsidize its retail business, it can no longer attract the retail customer deposits with competitive checking and savings products. Reduced leverage rules mean the bank has less capital to trade as well. And the issues compound.
Making matters worse is that Bank of America is saddled with a bloated cost structure. A product of numerous acquisitions, the company still lacks the scale and efficiency needed to make a business of its size profitable.
In short, I reiterate Wednesday’s recommendation that investors sell BAC and the funds that allocate to it.
