• 19 Jul 2011 at 11:10 AM

This Seems Like a Good Idea

By Matt Levine

After announcing its largest loss ever, Bank of America said this morning that it plans to reduce Basel III risk-weighted assets by $200 to $250 billion by the end of 2012 (slide 27). On BofA’s call, Glenn Schorr of Nomura asked how that RWA reduction would affect revenues. Bruce Thompson didn’t give an exact answer, but admitted that many of the businesses that will be cut back are money losers – calling out structured credit in particular – and implied that the revenue effect would be small or even positive:

I think if you look at and you saw the individual books, one of the most significant contributors to that reduction of $200 billion to $250 billion is actually something, over the last several quarters, that we’ve taken losses on. I think if you think about the structured credit trading book, that’s not something where you see significant amounts of income on as well. So think — the net of it is, while there is some income, there are also certain elements of that, that have been expensive. So we really don’t see any material level of impact into the income statement from reducing that $200 billion to $250 billion.

Earnings Transcript [Seeking Alpha]

Comments (17)

  1. 1
    Posted by SuperGuest | July 19, 2011 at 3:17 PM

    short BoA but long on Moynihan – that guy’s got his head on straight

  2. 2
    Posted by Citicorp Shareholder | July 19, 2011 at 3:20 PM

    Gosh. Combining a screwed up bank with a nearlyu00a0failed brokerage firm and with a mortgage company built on fraud inu00a0the middle of a huge financial industry meltdown seemed like such a good idea.u00a0

  3. 3
    Posted by Anonymous | July 19, 2011 at 3:31 PM

    BTW – it isn’t buy high, sell low. Just sayin’.

  4. 4
    Posted by Perkolator11 | July 19, 2011 at 3:31 PM

    If they’re going to cut back on “money losers” shouldn’t they just close the firm?u00a0

  5. 5
    Posted by Shop Smart | July 19, 2011 at 3:48 PM

    Also, never go grocery shopping high.u00a0

  6. 6
    Posted by Pie In The Face For Rupert | July 19, 2011 at 4:20 PM

    So, do I have this right? B of A has $250 billion of assets that generate zero revenues?

  7. 7
    Posted by Anonymous | July 19, 2011 at 4:24 PM

    This surprises you?

  8. 8
    Posted by Citicorp Shareholder | July 19, 2011 at 4:40 PM

    No, they’ve IDENTIFIED $250 Billion of assets that generate zero revenues.

  9. 9
    Posted by guest | July 19, 2011 at 4:53 PM

    Kenny Boone’s + Tan Man + Stan the Man = Pile ‘o Poop

  10. 10
    Posted by Anonymous | July 19, 2011 at 6:13 PM

    BAC sucks

  11. 11
    Posted by Anonymous | July 19, 2011 at 6:13 PM

    BAC sucks

  12. 12
    Posted by Anonymous | July 19, 2011 at 8:07 PM

    The best use of BAC’s balance sheet would be RnD on Time Travel.nnThen pay an employee to go back in time and loan Ken Lewis’s parents the money for an abortion.

  13. 13
    Posted by Anonymous | July 19, 2011 at 8:07 PM

    The best use of BAC’s balance sheet would be RnD on Time Travel.nnThen pay an employee to go back in time and loan Ken Lewis’s parents the money for an abortion.

  14. 14
    Posted by Guest | July 19, 2011 at 8:17 PM

    meh

  15. 15
    Posted by Guest | July 19, 2011 at 8:17 PM

    meh

  16. 16
    Posted by JCana | July 20, 2011 at 9:57 AM

    Mumbles Moynihan could not manage a lemonade stand…in early 2011 was talking about substantial increase in dividend, now unlikely for a few years! Also said the bulk of losses were behind BAC, now this crappy quarter…I’m short BTM and his Fleet drones

  17. 17
    Posted by John Thain | July 20, 2011 at 11:08 AM

    BACu00a0is full of sharks, long brown ones that swim in circles.

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