• 23 Aug 2011 at 12:27 PM

Dick Bové: Short All The Shares Of BAC You Can Borrow But It Won’t Do Any Good

By

Does no one know how to “break a bank”? Must he hold your hand through everything?

“There is no impact whatsoever on Bank of America’s balance sheet, based upon the price of its stock in the open market. If the price of the stock goes to a penny a share, it has no impact on the balance sheet of Bank of America. Bank of America sells the stock to the public, it takes in the money, and that is the end of the transaction as far as Bank of America is concerned. If you’re going to break a bank, you’re going to have a run on its deposits. That’s not happening. Exactly the opposite is happening…Deposits are pouring into Bank of America…Or, as in the case of the fourth quarter of 2008, you’ve got to bust a bank by making it repay all of its short-term debt immediately. Bank of America has so much cash on its balance sheet that it can pay back all of its short- term debt, it could pay back a big chunk of its long-term debt and still have excess cash on the balance sheet. You can’t break the bank by driving the price of the stock lower, particularly if the bank is as cash-rich as this one is with deposits pouring in as fast as they are.”

Dick Bove: BofA has sufficient capital [Bloomberg TV]

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Comments (13)

  1. 1
    Posted by VonSloneker | August 23, 2011 at 12:35 PM

    Obviously I haven't done the work, but does BAC really have no debt covenants linked to stock price? I thought just about everyone had those…

    -Andy Fastow, Bernie Ebbers, Koz

  2. 2
    Posted by K. Lewis | August 23, 2011 at 12:49 PM

    Whats a balance sheet and what are deposits?

  3. 3
    Posted by J. Paulson | August 23, 2011 at 1:00 PM

    Historically high interest rates in the US today are competing with hedge fund returns. I'm not entirely surprised people are running to stash their money in high yielding savings accounts.

  4. 4
    Posted by Jesse Livermore | August 23, 2011 at 1:09 PM

    I thought deposits were liabilities in bank balance sheet terms…

  5. 5
    Posted by Pat Bateman | August 23, 2011 at 1:30 PM

    Um, Bess, I believe you’ve got you pronouns mixed up. “HE” must hold our hands??

  6. 6
    Posted by Alt_EST | August 23, 2011 at 1:41 PM

    This fuckin' guy.

    -Treasury Stock

  7. 7
    Posted by dc3 | August 23, 2011 at 1:45 PM

    the bank credit ratings are key… but, i dont see S&P cutting the rating on anything with "AMERICA" in it.

  8. 8
    Posted by VonSloneker | August 23, 2011 at 1:55 PM

    +10

    -John Pierpont Morgan

  9. 9
    Posted by GentlemanTrader | August 23, 2011 at 2:28 PM

    all your balance sheet are belong to us

    -A. Mozillo

  10. 10
    Posted by Dr. FeelGood | August 23, 2011 at 2:38 PM

    Details Detail details !

  11. 11
    Posted by Unusual, No? | August 23, 2011 at 2:40 PM

    It's called the "cascading events" clause.

    -Propane Trader Who Doesn't Play Golf

  12. 12
    Posted by Simon Bolivar | August 23, 2011 at 2:41 PM

    Gracias!

  13. 13
    Posted by Anon | August 24, 2011 at 6:13 PM

    Who’s putting in these so-called deposits?

    It ain’t sane people. Perhaps there’s a political element to it….

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