Tuesday, March 11, 2008
Naples Real Estate Update
As I mentioned in a previous post, the Naples/Fort Myers area of Florida is currently the foreclosure epicenter of the nation. Here's the text of an email my real estate guy from down there just sent me:
FYI, BAC owns 12 properties in Naples..Countrywide 15.
In Lee County BAC owns 66...Countrywide 17.
Citibank 9 and 20. I thought citi was the biggest dummy. Let's see how this plays out...
The important point to take from this anecdotage may be what it reveals about Bank of America.
Supposedly, according to Wall Street wisdom, Ken Lewis and Co. have the lowest exposure to the housing bust. But as you can see, they are already extremely competitive with Countrywide when it comes to bad lending in this particular region.
So maybe BAC has more bad mortgage debt than everyone thinks. I remember getting essentially attacked by a BAC branch loan officer in Charlotte after merely glancing at their posted mortgage rates, "ARE YOU BUYING A HOUSE??? DO YOU NEED A MORTGAGE???" They certainly seemed like aggressive lenders to me. Furthermore, these existing losses beg the question of why the heck do they want to pile on more via the Countrywide acquisition. As I type this CFC shares are down to a scant $4.36 per share. I still maintain that despite the density and ego of its chairman Ken Lewis, there's still a chance that BoA bails out of its Countrywide bid. (Elevated option premiums are suggesting uncertainty as well.)
My Naples real estate guy also sent me this item:
It's a 10,000 square foot mansion in Naples that is currently owned by, you guessed it, the Bank of America.
So long as they hold this foreclosed property, they'll be on the hook for $65,000 in annual taxes and $7,200 in HOA fees - those losses, of course, fall on top of the bath they likely took on the failed loan. For the moment, you can click here to see the full house details.
Maybe BoA is stumbling because their management has other non-financial priorities?
Bank Of America CEO: Carbon Emissions Need Cap-And-Trade System
RALEIGH, N.C. (AP)--Private investors alone can't spur an environmentally friendly "green economy," Bank of America Corp. (BAC) Chief Executive Ken Lewis said Tuesday, as he called on Congress to create a cap-and-trade system to help control carbon emissions.
Such a cap-and-trade system would allow businesses to buy and sell emissions credits - selling extra allowances if they come in under a carbon-emission quota, and buying them if exceed the cap. It was one of several suggestions Lewis made to policy makers in a speech at the Institute for Emerging Issues forum, held at North Carolina State University in Raleigh.
"We favor a market-based mechanism to set a value for carbon allowances, and a clear, federal standard that would give investors the certainty they need to plan for the future," Lewis said.
The two-day conference, attended by General Electric Co. (GE) Chairman and Chief Executive Jeff Immelt and Duke Energy Corp. (DUK) CEO Jim Rogers, among others, focused on the development of alternative fuels and conservation efforts that will create jobs and reduce the pollution blamed for global warming.
"Like any large, important, transformative project, this one is going to require a lot of money," Lewis said. "I'm guessing that's why you invited me."
Along with the cap-and-trade system, Lewis said policy makers must determine what kind of environmental incentives and regulations work best at the state level, which would help avoid a patchwork of inconsistent regulation. The private capital market also needs "a stable and predictable regulatory environment with a bias toward clean energy and the green economy," he said.
Last March, Bank of America launched a $20 billion initiative to help its customers support the growth of environmentally friendly activities and to reduce global warming. On Tuesday, he said Bank of America had created a team whose sole focus will be to identify and finance projects that support a green economy and address the nation's environmental challenges.
"There are a lot of great ideas out there," Lewis said. "This fact creates a huge risk-management challenge for banks...as a financial backer of new technologies, the bank is in the position of picking winners and losers."
Well now Kenny, isn't it the free markets that actually pick "winners and losers".
Aren't you learning that down in Southwest Florida?
If you haven't already, visit my oft-hit post Bank Of America's Ken Lewis - Socialist Hero, Shareholder Villain.