A Good Day For BofA
Anyone who reads my blog knows that I am a long time bull on Bank of America (BAC). I am not however a fan of the bank. I may disagree with the bank’s practices and believe that the savings rates are crummy but I still believe that the bank will make money over the next few years. In fact I think that if you are looking to make money investing that BofA is a good long term bet.
Shares of Bank of America surged 6.37% today to end the day at $14.19. It looks like Wall Street investors are finally wising up to the earnings potential of the nation’s largest bank. The rise today was a bit of a surprise because it occurred on the same day that the bank was hit with a $ 3 billion dollar charge.
The bad loans really weren’t Bank of America’s fault but the fault of greedy predatory lending chain Countrywide Financial. Bank of America bought the troubled lending giant back a few years ago and the banking giant is now on the hook for any bad loans written by Countrywide.
Apparently Countrywide Financial peddled a lot of bad loans to Fannie Mae and Freddie Mac over the past few years. The bad loans were based on “faulty data” that Countrywide had. These bad loans will be a hit to the bottom line of Bank of America. The company’s home loans and insurance business is going to take a $2 billion dollar non deductible charge. That will hurt.
Fortunately Bank of America is well capitalized enough that the bank can pay off these charges without another stock offering.
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A young and savvy, yet experienced and accomplished investments mogul since ‘01; Michael has amassed a fortune as a private self investor. Recently starting his own successful blog and turning it in to a corporation — MIV Investments Inc., a company offering advice to thousands of people worldwide and attracting contracts from various reputable sources. His articles and publications have been linked to Forbes, CNN Money, Reuters, Bloomberg, and many other top worldwide mainstream media sources.
Michael Vlaicu
