it’s Bank of America day at Dealbreaker

Michael Feroli at JPMorgan had an interesting note this morning (via ZH) on the Republican letter to Bernanke, pointing out that this sort of saber-rattling against easing might actually make it more likely as a way for the Fed to assert its independence.

Moody’s downgrade of BAC/WFC/C, on the other hand, may have the opposite effect, precisely because the government hasn’t yet been able to declare its independence from the ratings agencies. Moody’s cut the banks’ credit ratings because they think the government is less likely to bail them out if they run into trouble. And that downgrade itself may have the effect of making the government less likely to bail out the banks if they run into trouble.
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  • 19 Aug 2011 at 10:53 AM

Thou Shalt Not Continue To Fuck Up My Portfolio!

Zzzzzt!  Bank of America Tower gets zapped by lightning with the Empire State Building looking on
The Bank of America tower getting hit by lighting last night. [NYCisMyMuse via AdrienneCarter]

  • 09 Aug 2011 at 1:06 PM

Brian Moynihan May Want To Look Into Buying Some CDS

It’s sort-of-good-news day at BofA, with Dick Bové declaring that if he were hypothetically buying bank stocks he’d hypothetically load up on BAC. In that tradition, footnoted.com has a nice note pointing out that, with the stock down 20% yesterday, Brian Moynihan looks less like a shareholder and more like a bondholder. Which at this point is – yeah, sort of good.

As they explain:

That’s not because Moynihan has been selling a significant number of shares — he still owns 481,806 shares, up 7% from a year ago, plus heaps of options and restricted shares that he may get title to eventually. Even at today’s depressed prices, the shares he actually owns are worth something like $3.4 million.

But BofA also owes Moynihan a bundle, in the form of pension and deferred-compensation promises. Unlike retirement benefits for the rank-and-file, executive benefits typically don’t actually reflect cash set aside in a dedicated pension fund or 401(k) account. Rather, they’re nothing more than IOUs — in Moynihan’s case, IOUs worth some $10.7 million as of March 16, according to BofA’s latest proxy, and probably at least a little more by now.

Compare the structure of Moynihan’s claims to his firm’s capital structure. Read more »