Great graphic in WSJ about the history of Bank of America:
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click for larger graphic

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I have no position in any money center banks — as long as their books are opaque (thanks to FASB 157), they violate the “know what you own” rule, making it difficult to place them into long term asset management accounts.

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Source:
Bank of America Ponders Retreat
By DAN FITZPATRICK And JOANN S. LUBLIN
WSJ, January 13, 2012  
http://online.wsj.com/article/SB10001424052970204409004577156881098606546.html

Category: Bailouts, Credit

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Building a Troubled Titan”

  1. philipat says:

    It’s not only a case of the value of what is ON the Balance Sheet but also what is NOT on the Balance Sheet. The market as decided that the assets of the Banks are worth about 40 cents on the dollar. It gets to the point where transparency and a return to regular accounting standards might be in the best interests of the Banks. And, of course, only then, at the behest of their Corporate masters, will will Congress force the FASB to reinstate sane accounting practises.

    In the meantime, investing in these Institutions remains little more than a crap shoot. With emphasis on the former.

  2. Savage1701 says:

    Well, if “retreat” means selling off geographic areas to smaller, more fiscally responsible banks, then bring it on.

    And then we MIGHT have a shot at knowing what the real, non-FASB 157 values of their assets are, should any of those be part of the sale.

    Knowing several smaller banks in my area that are highly profitable and customer-service oriented, I would be delighted to see them pick up pieces of BofA on the cheap. I just hope they will be smart enough to demand to know what they own before they buy.

  3. Gretchen says:

    Sue Bies, cited in this story as being upbeat about effects of housing falling, is now a director at Bank of America… http://nyti.ms/w17HLX

  4. AtlasRocked says:

    They surely named the bank with the perfect name. A real-life allegory tale.

  5. Lyle says:

    The graphic has the order of NCNB and BofA wrong, NCNB bought BofA taking the more famous name, and letting the executive staff go. Consider that Ken Lewis was from NCNB, and actually was head of the move of NCNB to Texas during the great Texas bank failure wave (when all but Texas Commerce failed, while Texas Commerce was sold to Chemical which became Chase thru another merger and then JP Morgan thru yet another). Note that the HQ of BofA is in Charlotte which is where NCNB was, not San Francisco where BofA was.

  6. PrahaPartizan says:

    What is truly fascinating is that Countrywide accounts for a little less than 4% of all of the asset “value” acquired/merged/purchased during this period. If one is led to believe that horrendous real estate practices are what have torpedoed this institution, then one must conclude that the net value of that acquisition was actually less than zero, even at the time the merger occurred. Whatever happened to due diligence?

  7. 873450 says:

    @ Gretchen:

    Sue Bies – already looking forward to the next bubble.

  8. njAndrew says:

    But I keep hearing Dick Bove on Bloomberg radio saying banks are a buy and undervalued.

  9. budhak0n says:

    Oh just fire up the Pig Roast already. Watching this one die is sadder than watching Al Pacino at the end of Scarface go into a tireless soliloquy on the benefits of employee incentive programs.

  10. flocktard says:

    Doesn’t mention some of the other purchases like C&S/Sovran, and Standard Federal, which was a great organization. They all did it- check out this wiki on mergers- where were our anti-trust laws?

    http://en.wikipedia.org/wiki/List_of_bank_mergers_in_the_United_States

    Worse still, is that B of A now has a rap sheet longer than some crime families. Whether it was hiking rates on credit card users with perfect credit, foreclosing on homes for a shortfall of 1 cent (true story), muni bond fraud, (where Judge Rakoff reluctantly agreed to the SEC settlement-sorry, Vikram) and every AG in the country from states you never even heard of chasing after them for mortgage fraud and unpaid mortgage recording fees, B of A is the Stratton Oakmont of banking. Make no mistake- this is a rogue organization, a criminal enterprise.

  11. Sunny129 says:

    Mis-pricing of RISK condoned by Regulators has gone too long in bailing out FIRE Economy including Zombie Banks!

    FREE MARKET cannot exist without M to market accounting. Till then this a MADEOFF Economy with phantom profits and fraudulent accounting. The charade continues!

  12. [...] Barry Riholtz samples a graph from the Wall Street Journal illustrating the history of Bank of America’s acquisitions since 1990 and how it came to be such a ponderous, failing giant. [...]

  13. duaneteddy says:

    Guess what Bank of America’s original name was. The Bank of Italy! With the problems Italy has, how appropriate is this.

  14. Giovanni says:

    Yes @duaneteddy it was called the Bank of Italy because it was created to serve Italian-Americans and other minorities when other banks wouldn’t even accept deposits from them. It’s so sad to see what has become of A.P.Giannini’s bank; probably the first bank in the world to serve average citizens and had a large part in the early growth of the California wine and movie industries. Giannini pioneered home loans, installment payments and when they came to be, auto loans. He was also the inventor of branch banking; all of which was designed to serve ‘the little guy’ of which he was one by birth. For more on A.P. Giannini see: http://ti.me/yr8LCd and http://bit.ly/xtnyrm