A couple weeks ago, Dick Bove was out there preaching his ‘this is the new golden era of banking’ sermon. Now he is getting down to specifics starting with BAC. They will be ushering in this period of unbridled profitability by enjoying “horrific” loan losses that may require them to increase their loss provisions to $46 billion. Possibly spurred on by the unambiguously bullish comments coming out of the G8, Bove raised his price target on BAC by approximately 36% from $14 to $19 and had some choice words for anybody bearish on financials.
It is now being conceded, by even the most bearish observers, that claims that the industry was insolvent were incorrect and, therefore, banking will survive and possible thrive
Bank of America suffering “horrific” loan losses – Bove [Reuters]
You’ve got to hand it to the guys at Austin-based Amherst Holdings, they’ve got some serious moxy. Over the past year, Amherst sold credit protection to JPM on some Lehman-issued subprime MBS and later encouraged the servicer, Aurora Loan Services, to buy the outstanding loans. This made the CDS it sold to JPM completely worthless (BAC and RBS also bought protection on the bonds, but through other counterparties). Far from admitting any impropriety, Amherst contends that it was simply in the right place at the right time.
Amherst says it didn’t do anything improper, but took advantage of an opportunity when it emerged. A lawyer reviewed and blessed the strategy for the firm, according to people familiar with the matter.
Privately held Amherst says it acted in good faith trying to limit losses for clients, who had sold credit-default swaps on the securities. “We wouldn’t jeopardize our business and reputation by entering into an opportunistic trade knowing what the outcome would be,” said Amherst’s chief executive, Sean Dobson.
A Daring Trade Has Wall Street Seething [WSJ]
Bank of America has named four outside directors to its executive board. According to the Journal, they are former Federal Reserve Governor Susan Bies; former Federal Deposit Insurance Corporation Chairman Donald Powell; former Compass Bancshares Inc. CEO D. Paul Jones and former Bank One Corp. executive William Boardman.
BofA Taps Four Outside Directors [WSJ]
A couple weeks ago, Dick Bove was out there preaching his ‘this is the new golden era of banking’ sermon. Now he is getting down to specifics starting with BAC. They will be ushering in this period of unbridled profitability by enjoying “horrific” loan losses that may require them to increase their loss provisions to $46 billion. Possibly spurred on by the unambiguously bullish comments coming out of the G8, Bove raised his price target on BAC by approximately 36% from $14 to $19 and had some choice words for anybody bearish on financials.
