Instead Of Worrying About Credit Risk...

So while the bank is losing tens/hundreds of billions....they still have time to promulgate an extracurricular POLITICAL CAMPAIGN.

For more on this very topic visit my killer classic post - Bank of America's Ken Lewis - Socialist Hero, Shareholder Villain.

Recall when Al Gore's sci-fi motion picture came out - A Convenient Myth - Kenny had them screening the movie, at work, all day long!

Look at that graphic above again.

Melvin Dwork???

Did God make him gay? Or did the people who named him? Seriously.

Perhaps it would have been wise for him to take his mother's last name.

Then again, perhaps he did!

For the record, I don't care who's in the military - SO LONG AS THEY CUT IT IN HALF budget-wise.

ATM Fees, SURGING

At Penn Station in NYC the other day I withdrew $340 from my account...

But it only dispensed $220!

I checked with the bank today and it did in fact confirm that I typed-in/requested $340 on Sunday. I had been doubting myself; and hadn't requested a receipt.

After a *first check* they haven't found any problems with the money count from that ATM. So I've had to file some sort of appeal.

Of course this is Bank of America we are talking about.

I've never had a problem with Capitol One. See an old receipt of mine above.

Morons Reporting On Morons

I think the story in the Daily Mail was actually penned by 7th grade government school students. I was left scratching my head after these illiterate excerpts:

Police have arrested two dozen protesters for trespassing during a demonstration against Bank of America’s foreclosure practices at the banking giant’s offices in downtown Boston.

The Boston Herald reports that the event was an act of civil disobedience that the organizers intended to send the message that the lender’s practices were unfair.

There was no mention of Bank of America’s planned debit card fees, which recently have generated headlines and frustrated customers nationwide.

The Bank of America website crashed yesterday after being overwhelmed by angry customers following the decision to charge them to use $5 a month if they use their debit cards...

Though the bank, like several others who instated similar fees, will use the revenue to help increase revenue, the move is seen as biased against less wealthy clients as they are more likely to use a debit card because they are often denied credit.

U.S. banks have been looking for ways to increase revenue as regulations introduced since the financial crisis limited the use of overdraft and other fees.

In spite of hesitations (?) about the new fee, Bank of America's stock price was up at the close of business Thursday, coming in at 6.35.

Bad diction, run-ons, misinformation...

My favorite though, hands down, was *use revenue to increase revenue*!

And note that half of the story was about debit cards even though admittedly *there was no mention of the debit card fees* at the protest.

Warren Buffett - STEALING From Taxpayers!

Okay, first of all, even though BAC stock is on sale for less than $7 a share....the guy, this RESCUER, would only buy 6%-dividend-paying PREFERRED STOCK.

That means the common shares, what the lumpen masses own, can and most likely will be diluted all the way down to zero and he'll still be in line to be paid his 6% dividend.

And who'll be paying it?

TAXPAYERS!!!

With all the backdoor bailouts we're already funding Bank of America to the tune of billions per year. Buffett's first dividend is essentially already coming from us.

The idea that this guy is a genius is nonsense. Recall he sold ALL OF HIS SILVER around $5 or $6 - at the bottom! (Silver is $43 today.)

And from the article I cropped above....it looks like this Moronic 'old coot' is still averaging up on his shares of Wells Fargo.

Mark my words that stock will be his undoing - his ignominious swan song.

The guy is nothing short of a complete jerk.  Not only is he *managing down* his own taxes and *talking them up* for the rest of us....he has to basically STEAL from the kitty too!

Thank Goodness For $20+ Billion In Losses?

This week Bank of America - make that *Ken Lewis' Bank of America* - announced some $20 billion in losses due to its savvy investment in Countrywide Financial.

Hmmm...

Is this the same Countrywide that Ken Lewis' bank was raving about merely 2 years ago?

I'll enlarge the last line:

"THANK GOODNESS WE HAVE IT", i.e. Countywide!!!

And they said that, not only after OVER-PAYING for the subprime lender, but AFTER having many months to scrutinize the books.

Here's what I wrote/predicted 3.5 years earlier, in January 2008:

Ken is not simply paying $4 billion (on top of the $2 billion that already vanished); he is assuming the debt of a company whose liabilities exceed $120 billion. Even with a light recession and slightly higher Treasury rates, his gamble could easily cost BoA $20 billion!

How prescient am I!

And guess what....I'll predict ANOTHER $20 billion in Countywide Losses from here. Look, they lost all that money already and interest rates actually WENT DOWN. What's going to happen to these toxic loans when borrowing rates inevitably uptick???

Revisit my on-target prediction and enjoy one of my all-time most popular posts here:

Bank of America's Ken Lewis - Socialist Hero, Shareholder Villian

Mutual Foreclosure Hatred

Alright...

One of my operatives just sent me this pic of a row home in *Fishtown*.

Where's that?

Well, Fishtown is a neighborhood in Northeast Philadelphia. It's not the worst section of Philly, as that's a super competitive division(!), but it's kind of rundown and seedy. Put it this way - there's no market for *dental services* there!

I once dated a young broad from F-town....but she dumped ME unceremoniously!

Obviously this sign was born out of more than just bad customer service over a bounced check or something.

I'm right sure it's a *foreclosure* situation.

And meanwhile, somewhere in a Bank of America corporate office there's no doubt a sign or a memo:

We Hate Fishtown...It's Full Of Deadbeats Who Lied About Their Income!

My Analysis = Money In The Bank

Last week, in reference to Wells Fargo's sham *trading* profits I wrote:

Bond markets have rallied in the past year. Most of these Big Bank earnings from the likes of JPM, BAC, WFC, are from simply marking up the paper value of their fixed income - much of which is still very toxic. They aren't dumping any of these securities, so the risks of these long-term instruments have not been eliminated or even mitigated. Note the banks deceptively refer to these unrealized, and unsustainable gains as *trading profits*...

And financial blogger Reggie Middleton confirmed that. He writes:

Other income was higher owing to fair value option impact on Merrill Lynch structured notes (the highly suspect, level 3 asset, non-market price based opinion of management) which resulted in 1Q10 gain of $226 million against loss of $1.6 billion in 4Q09 as well as minimal write downs on legacy assets (again, the highly suspect, formula driven opinion of management) against write-down of $1.0 billion in 4Q09. Although it shouldn’t be necessary, I will still state that gains in these areas during an era of highly suspect asset values should be viewed with a very jaded eye.

Why mention this?

To make a point. Realize that I didn't read Reggie's - or anyone else's - analysis before offering my own. Without even going near a news story or a balance sheet I KNOW what the banks are doing. They are playing games with the *mark-to-model* license granted them by Big Government incumbents. Again, Bank of America is not selling those Merrill Lynch *assets*; they are just marking them up. They aren't selling them for the same reason those overpriced McMansions are just sitting there on the market - because the sellers don't want to hit the *reality* bid.

I was at dinner a couple of weeks ago with some highly compensated *analyst*. He was singing the praises of the big banks, particularly Bank of America. I scoffed and told him it'd be trading at $5 a share yet again. He scoffed back; told me that it most certainly would not; that banks were *what he covered*.

What he *covered*? Was I supposed to bow in deference?

CaptiousNut - Did you short Bank of America at $40, like I did? Did you predict it was going to $2.50?

CaptiousNut - How leveraged are the banks? What happens to the value of their collateral with 7% mortgage rates?

The self-proclaimed expert had no answer to that. And we made a gentlemanly bet about the future path of the stock.

Look, just because the Federal government is bailing out the banks, that doesn't mean common shares of their stock will maintain value - no less appreciate. Consider Fannie Mae and Freddie Mac. The Feds have made their bondholders 100% whole and still their stocks essentially went to zero.

Obviously, the Feds have demonstrated that plutocrats people with money in the bank....their money is safe in the sense that Big Government will simply print (more) currency and hand it over to the banks should they suffer a *run* or become functionally insolvent.

So rest assured, your nominal wealth is safe. Just don't ask about its *purchasing power*.

Later in the evening, I hit the expert one more time:

CaptiousNut - Look, you can focus all you want BAC bouncing from last March....but the fact remains, the stock is at a 14 year low, has no dividend, and has enough unrecognized losses for the next decade.

Morons Retaining Moronic Lawyers

Yesterday, in - Wall Street Scalping - I discussed the plight of embattled Ken Lewis, former skipper of that financial Titanic Bank Of America.

Recall that when first grilled as to why he spent $40 billion for a bankrupt Merrill Lynch, Ken essentially said the government forced him into the bad deal. And this idiot even invoked *patriotism* as a reason he bent (shareholders) over. See - Ken Lewis - Interview Follow-up from exactly one year ago.

Alright, he was supposedly bullied into it - at least that was his initial, fall-back defensive position.

But what about now?

Here's his Moronic attorney Mary Jo White, from that same Zerohedge post:

...Lewis is being "public vilified by the political search for accountability for the financial meltdown." White also said that despite the initial problems with the merger-including the mounting losses that led to the government bailout-the merger has turned out to be an "unmitigated success for BofA." Merrill Lynch trading operations, like the trading operations of the other big banks, have taken advantage of historically low interest rates and borrowing costs to earn billions of dollars in profits, helping the banks to smoothe out losses from consumer and commercial real estate loans that continue to mount as economic conditions remain weak.

Did y'all get that?

At first he was *forced* into a bad deal.

But now, he's going to assert that Merrill is *earning billions*, i.e. that it was a good deal, that therefore he can't be guilty of misleading his shareholders.

Obviously, the Moron hired a real dunce to represent him! How fitting!

Here's my take:

At first, a reluctant Ken was indeed gulled into considering buying Merrill by the most savvy crooks on this over-heated planet.

But then, his greedy, egomaniacal eyes were popping with dreams of *stealing Merrill Lynch*, with dreams of running the largest financial concern in the world. Recall that he was always a hopelessly naive perma-bull; every red quarter he saw he figured to be *the bottom* - as far back as Q4 of 2007! So these *firmly held beliefs* triumphed over any concerns about shareholder disclosure. I still don't get why he didn't lower the price, at least a little bit.

And now he's got the gall, and the gap, to not only submit that Merrill Lynch is making money hand over fist (*billions* in trading), but that he should get credit for this homerun of a deal.

Believe me, Merrill Lynch IS NOT making any meaningful, sustainable money. Just y'all watch, when debt markets come to their senses....all sorts of *inherited*, *legacy* losses will materialize from Merrill, yet again. Remember, this is a company that lost $19 BILLION between July 07 and July 08. Wikipedia sums it up nicely, that's "...$52 million daily"!!!

In all likelihood Merrill's so-called profits today are merely *unrealized gains* on the fixed income junk they wrote down last year. Bond markets boomed in 2009; AND these banks were given license to mark the *assets* to whatever the bleep they felt like. In summary, Merrill still has the junk, still has the risk, and is hiding it *off the balance sheet* a la Wells Fargo and JP Morgan. See - Capitol Thievery.

For my Ken Lewis master link - click here.

Wall Street Scalping

The public desperately wants a Wall Street scalp, or twenty...

So an incumbent Big Government will eventually toss the plebs a bone.

And it looks like that bone, to start with, is Ken Lewis - the rube who was gullible and Moronic enough to do Hank Paulson and Ben Bernanke's (read: Goldman Sachs'!) dirty work.

I know Ken, probably better than he knows himself, and Ken probably thinks he's got the *goods* on those two shysters - that if he's going down, he'll bring them down as well. Or at least that he has enough to save his own a$$.

Except that's probably not going to happen. He's most certainly going down. He may seem like an unfortunate scapegoat, but he's more than sufficiently culpable.

Tyler Durden of Zerohedge nails it:

To be sure, he is guilty of not simply stepping down when he was put in the position of having to decide between his job and lying to shareholders, which is precisely what happened in those fateful days in December of 2008. For his choice to proceed with the government's plan and to betray his fiduciary responsibility, he should be punished...

I'd advise all would-be on-pilers to get a head start. Because once the market, and BAC stock, starts to collapse anew....everyone is going to jump on Ken - not only because it's warranted, but also because it'll serve as yet more timely smokescreen for the bigger criminals, i.e. Goldman Sachs and their government apparatchiks.



For my master Ken Lewis link - click here.

And thanks to West Coast Tom for sending me the link!

Selling Out

From the Wall Street Journal last week:

Investment bankers in the U.S. have begun using equity derivatives to convert restricted shares paid as bonuses into cash, side-stepping new guidelines on remuneration which were designed to prevent bankers cashing out for at least three years, according to a headhunter.

The bankers are using over-the-counter equity derivatives strategies such as call options, put options and collars to monetise their shares now, albeit at a discount to what they would receive if they waited for the restrictions to lift.

The revelation comes as global regulators seek to put an end to large cash bonuses in favour of deferred awards which tie bankers' compensation to long-term performance.

Gustavo Dolfino, senior managing director of U.S. business services firm Accretive Solutions, said some top earners at investment banks have negotiated to receive the shares component of their bonuses in restricted stock that is already vested or soon to vest. The stock is still subject to restrictions, for example on when it can be sold in the open market. However, because it is vested, they are able to turn it into cash by trading derivatives.

It is not clear how many bankers have used this mechanism, but Dolfino said: "The vesting provision allows these executives to take advantage of a financially engineered legal loophole which lets corporate insiders with concentrated equity positions and holders of control, restricted and M&A stock to monetise that stock.

"Rather than wait three or five years for the restrictions to pass, bankers would rather take a discount of up to 50% now just to get out and do something else."

Okay, first of all, ignore that last line. There AIN'T NO bankers taking *50% discounts* on their bonuses in order to reap them today. That's ludicrous on its face.

Now, getting to the crux of this story...

It's obviously meant as a swipe at *fat cats*, at those high level executives who are making an *end around* the attempts to align their compensation with long-term stock performance. Fair enough.

But there are thousands of mid-level employees who are forced to take substantial amounts of their annual pay in the form of vesting, restricted stock.

For those of you unaware, restricted stock is usually given at the current market price. So every tick upward leading up to your bonus day is bad - it results in you getting fewer shares of stock.

And then once you get the stock, you are theoretically powerless to do anything until it vests - usually over 3-5 years, I believe 7 used to be more common. In other words, one whole year after getting the *bonus*, you can only sell, say, one-third of your allotment. Obviously, the stock can be much, much lower by the time all the shares have vested. Imagine getting 50-100k restricted stock awards every year in say Bank of America? Only to see it plumb $2.50 a share last March?



or, even worse, in Citigroup?!



What about Fannie Mae, AIG, Bear Stearns, or Lehman????!!!! All equity stakes in those have been reduced to ZERO. For wound-salt...people paid income tax (even possibly capital gains) on shares as they vested to boot!

But here's the deal....

In general, most companies would never allow an employee (esp. a high level one) to short their own company stock; they see it as a red flag for possible insider trading. But there is, I believe, a special case. Workers ARE PERMITTED to short up to an amount equal to their unvested, restricted stock. Let's just say I've executed the trade for people before.

I don't know about you Morons, but if I was a Goldman crook, and I was handed $5,000,000 in restricted stock as part of my compensation, at today's elevated price of $157(!)....I'd sure as heck try to *hedge* the risk of my vesting period!

I'd short directly against the unvested shares if possible; I'd find some OTC bookie to collar (short call, long put) my stake; or I'd try to lay off some of the risk through ETFs or other index products.

Very rarely is there *nothing one can do* in these situations. Everything can somehow be hedged. Behold the alchemy of this parlor game!

EVERYONE Should Quit Trading!

Obama Rips Banks, Proposes Ban On Proprietary Trading

President Obama stepped up the heat on big banks Thursday, saying he would fight to ensure that their "binge of irresponsibility" never happens again.

He proposed limits on banks' size and proprietary trading and said he would work to "rein in excessive abuse that brought down our system."

He said banks "backed by the American people" shouldn't be allowed to own or sponsor hedge funds and private equity funds for their own profit, while putting customers at risk.

About the new proposed rule that'd limit the proprietary trading of banks, the head of the New York Stock Exchange, Duncan Niederaurer said,

....implementation is challenging. As a student of the market I can tell you that it all blurs together...

But he's also a *Former Managing Director of Goldman Sachs*!!!

Supposedly, Goldman trades 20 times as many shares for their own account than they do for their customers.

I have no problem with Goldman gambling its own money; but they shouldn't be brokering trades as well. Doing both entails almost the biggest conflict of interest imaginable.

Look, I'm against most regulation of markets. The fund managers (and their investors) who willingly give their trades to Goldman and get ripped off....they deserve the bad fills and whatnot.

But within a regulated market, it's not hard at all to segregate trading and brokering. Any and all arguments against doing so are specious and fall flat.

I got sidetracked here.

Look, it's not *proprietary trading* that got all these banks in trouble.

It was the gambling implicit in no-money-down, high-priced mortgages in residential AND commercial real estate. And credit cards too!

So yes, FDIC-insured banks probably shouldn't be rolling the dice like Sol.

But selling 20 or 50-1 leveraged homes to José Sixpack has proven far riskier.

Getting back to Obama for a minute. He's right to be slamming the banks - even it he's clueless at the to extent of Big Government culpability in their behavior. They were born of leverage for crying out loud, with their fractional-reserve sanction, FDIC insurance, and whatnot.

You see while Obama inveighs against banker's "binge of irresponsibility"....

Not only will this anti-trading rhetoric do nothing to lower the risk profile of Bank of America, JP Morgan, Wells Fargo, Citigroup, et al,....we're still left with very little to combat the *binge of irresponsibility* from politicians. Consider the hypocritical irony of Barney Frank, serial apologist for Fannie, Freddie, and subprime lending, up there next to the podium. What a farce!

Was Bound To Happen

My MIL won't give her credit card number over the internet; instead I believe she *calls* and will only do so over the phone.

And I have a jurassic aunt who won't even give out her card info over the phone!

Why not? Well, for the fear of so-called *identity theft*.

Some time back I once mocked my aunt, telling her that she flatters herself, "...no one would ever really want TO BE YOU!"

So today I'm at Chipotle for lunch with my first wife and two children - when my credit card was declined.

Right away, I looked at Mrs. C-Nut with accusatory eyes and presumed that she had been late to pay the bill, yet again. Because that's what they're doing now, miss one payment and they shut you off. See my - Personal Credit Crisis - from this past summer.

But my wife insisted the bill was paid. Figuring this may be somewhat important, I put down my quarter-eaten burrito and endured the painful process of calling my credit card company (BoA/MBNA). Apparently, there was a fraud alert that was set off. The dude asked me if I charged $1 at Apple.com. I most certainly did not. And then he asked me about a $600 purchase at hocks.com or something (I couldn't make out the name of the website amidst the din of the restaurant). That sounded fishy to me - and my wife didn't know what it could possible be. But the customer service rep was pretty certain it represented foul play. The $1 charge at Apple.com was a test or something to see if the card worked, so he declared. Right away he said they were turning off the card, issuing me a new one, and mailing me some affidavit.

So what happens next? My wife thinks it's my landlord, but it most certainly is not. It's probably some waiter or bartender who ran the card some time ago. They wrote down the numbers and then later googled for my address. Or maybe not? I really don't know. I would like to know where they tried to ship the merchandise too. That would be telling, would it not? I mean, they could probably ship the stuff there and then handcuff whomever tries to take it home pretty easily, right?

But they won't do that and therein lies the problem. These clowns don't think it worth their time to chase down what they think are *small crooks*, so they just bake the fraud losses into higher prices for the rest of us.



It looks like hocks.com is some medical/pharmaceutical retailer. I just called them directly and left a message. I can understand why Bank of America/MBNA might not want to even help me track down the thief. After all, they just take back the funds they were going to wire over and wash their hands of the matter; but I'd presume that hocks.com would be more interested in nabbing the crook, a guy/gal who's just going to try the exact same scam again, and again.

I'd be really surprised if they actually did anything in the way of helping me or law enforcement, and that will either be confirmed or denied next week.

In the meantime, I guess I have to run a credit check or something to make sure no one has opened cards in my name. I don't really know. Have any of y'all been victimized thusly? Any advice?

So what exactly was *bound to happen*?

Well, that someone would officially want to steal MY IDENTITY and be me!

Lastly, my MIL, the one who's chauvinistic about *not giving out her credit card number* online...

She was boasting of her precaution a couple of weeks ago when my wife interrupted and retorted:

Mrs. C-Nut - Yeah Ma,...but you do other stuff like click on *SAVE THE CHILDREN* (spam)!

Whether it's driving too fast, eating poorly, fake-n-baking, mortgaging too much, clicking on pop-ups, or making ill-timed ETF purchases....we all have some risky habit or another!

Other pertinent reading I just came across:

Here is an interesting article about crooks stealing ATM cards and PINs.

And here is another on gift card scam artists.

Ken Lewis - Insistent Idiot!

CHARLOTTE, North Carolina, Dec 2 (Reuters) - Bank of America Chief Executive Kenneth Lewis said he does not believe housing will face another big downturn, as some fear.

"We don't see it," Lewis said.

Ken, slated to retire very soon, is going out like, well, George Bush!

I could offer many refreshers here on things Lewis has said in the way of erroneous economic predictions....but in the interests of brevity, I'll just offer one.

Let me ask y'all a question - How's the high end of the housing market doing near you?

Yeah, totally dead and bidless, with plenty of shadow supply on the banks books. See - Mr. M.

Recall that nearly a year ago, Ken Lewis' Bank of America aggressively jumped into the jumbo mortgage market and became the nation's biggest such lender!

See - Who's A Jumbo-Sized Moron?.

Ken doesn't see another big downturn in housing....and that alone ought to make every over-leveraged homeowner homeborrower in America pretty darn scared.

Bank Of Deception

I guess I have to keep commenting on my buddy Ken Lewis and his circus act departure.

Two days ago, BAC annouced they would *repay the TARP* money that was half-forced on them by the government.

Now there're a whole lot of things happening here so the event has to be carefully dissected.

Earlier this year, as BAC stock spiraled to $2.50 a share (!), Ken Lewis was out there saying that he *never should have taken so much money* that some of it was *forced on him*....and that they'd *pay back the money by the end of the year*. Most of this whining was ridiculous; a CEO shouldn't care about stock price fluctuations. It's simple, if your stock unfairly goes to 2.50, then management (or private equity) should be buying it back - at least all of those dilutive shares it grants itself each year!

So here it is the end of the year and it Ken is paying back the TARP money.

Or is he?

More accurately, I submit that CURRENT SHAREHOLDERS are paying it back since they are being diluted to the tune of $19 billion.

At this very moment, Bank of America is trying to find a successor to the embattled, Moronic Lewis. The details of which were covered in - Titanic Can't Find Willing Skipper. Essentially, a cadre of idiot pundits and whatnot believe that having borrowed (more) money from the Federal government, that such a yoke was making the open CEO job unattractive to the *good candidates*.

Side Note - Do y'all think ANY veteran from the banking industry, ANYWHERE, over the past several years has displayed the acumen needed to head Bankrupt of America?

I certainly don't. They need a perspicacious, Captious outsider.

You see, whether BAC shareholders(!) pay back the TARP money now or not is beside the point. The Feds have demonstrated that they can be tapped, whenever, with impunity, henceforth!

Okay, moving on to the dilution.

I'm no forensic accountant, but apparently even those dudes can't understand the financial legerdemain that's being passed off by the likes of BAC, JPM, WFC, C, et al.

But think of it this way - BAC needed $19,000,000,000 in NEW CAPITAL - over and beyond what it had left from the initial Fed, TARP loan.

Minimally, that implies that Bank of America LOST $19 billion in the past 12 months or so.

I say 'minimally' because these banks are leveraged - probably at somewhere between 5 to 10 times its capital base (if not way more).

So a $19 billion capital injection, to my amateur accounting intellect anyway, implies that BAC LOST or *wrote down* at least $95 billion in its assets over this period.

And, mind you, these are merely the recognized losses in a time where the banks have been given license to mark-to-myth their assets. Just imagine how big this dilution would be otherwise.

I've read a bunch of the media reports on this recent news and clearly, nobody really got what happened.

The idea that BAC paid back the money because *they no longer need it* is a complete joke.

As was this little *can't find a new CEO....ergo we have to dislodge from the Federal teat* soap opera.

The fact is, Bank of America is losing money hand-over-fist; they raised capital because they NEEDED CAPITAL - and they'll need plenty more.

Luckily for shareholders, the stock has magically tripled off its March low - otherwise the dilution would have been exponentially far worse.

Another important thing to remember is that this wasn't a classic case of *raising money...to invest money*. No, the money they raised is already gone, already sent back to the Feds. BAC's balance sheet hasn't improved a lick from this transaction.

All it did was jam the shareholders....

And give the board/management the cover to go on doing the things they did which got them into this mess in the first place!

Titanic Can't Find Willing Skipper

On the wire today:

Nov. 22 (Bloomberg) -- Bank of America Corp.’s board may extend its search for a new, permanent chief executive officer into 2010 if directors can’t settle on a candidate in the next four days, according to people familiar with the matter.

Some candidates are reluctant to wade into disagreement between board members and the government over the bank’s future strategy, said Rochdale Securities LLC analyst Richard Bove, citing large shareholders briefed on the matter.

“The government and perhaps some of the new directors want the bank cut back in size, while the old core Bank of America people don’t want to do that,” Bove said.

Dropping Out

O’Neill, a former chief financial officer of predecessor BankAmerica Corp., withdrew from consideration after talking with search-committee members because he felt they didn’t fully grasp how serious regulators are in their demands for change, the people said.

O’Neill told the committee members that the company needed to increase the size of its banking operations and shrink its trading business, one person briefed on the talks said. The committee members responded that such a shift would be unproductive because it would abandon the strategy set when Lewis bought Merrill Lynch & Co., the person said.

Compensation is another obstacle, because Bank of America’s $45 billion bailout puts the CEO under the purview of paymaster Kenneth Feinberg. Lewis agreed in October to forgo any pay for 2009 after being advised to do so by Feinberg.

At least four of those on the Finger list subsequently said they weren’t interested. They are O’Neill; former JPMorgan Chase & Co. investment-banking co-head William Winters; U.S. Bancorp CEO Richard Davis; and Eugene McQuade, a former Freddie Mac president who now oversees Citigroup’s largest banking subsidiary, according to people familiar with the matter.

Two executives not on the list, Bank of New York Mellon CEO Robert Kelly and BlackRock Inc. CEO Laurence Fink, have told colleagues and friends they’re not interested.

Aside from Moynihan, 50, other internal candidates include Chief Risk Officer Gregory Curl, 61. Lewis, 62, favors Curl, one person familiar with the matter said earlier this month.

Outside Candidates

Federal Reserve officials, who questioned Lewis’s judgment when he considered backing out of the bank’s $29 billion purchase of Merrill Lynch, are pressing for an outsider because they want more drastic change, a different person said.

Lewis has indicated to associates that he would remain as CEO on an interim basis if asked by the board, according to a person familiar with his thinking. Rochdale’s Bove wrote in a Nov. 20 note that several large investors support the idea.

Hah!

I find it hard to believe that NO ONE wants to eat the $hitpile that Ken Lewis has prepared.

It's unbelievable that Greg Curl's name is in the mix. He's nominally the *chief risk officer* for Bankrupt of America. But more than that, he was supposedly the *brains* behind all of BoA's mergers. How'd they work out again? Furthermore, topping out his uncredentials....as the article states - LEWIS FAVORS HIM!

I say go with Moynihan. I met the guy socially several years ago. He had the perfectly firm handshake!

ANYONE but extending Ken Lewis.

Although admittedly, Lewis hanging on because no one wants to inherit his job would have plenty of deeply ironic, entertainment value. A captain, by all rights, should go down with the ship, no?

RIP - Ken Lewis

Even though I have turned a deaf ear to the crazy irrationality that is the stock market these days....

I did hear late yesterday that my boy Ken Lewis has *retired* - effective December 31st of this year.

That characterization couldn't help but remind me the time Randall Cunningham also *retired*....when, in fact, there wasn't a team in the entire NFL that was interested in signing him!

But even in the unlikely event this über-Moron wasn't *forced* out by self-serving, Big Government scapegoaters....

I submit that Ken would be leaving now anyway.

After all, look at his bank's stock - he thinks he's getting out on a *high note* a la George Constanza.

Would you want to be him, after all the sh*t he took last year, heading BAC for the inevitable crash?

I sure wouldn't.

It will be an interesting sideshow, however, to weigh the pile of crap thrown at him on the way out the door. A lot can happen in two months.

When BAC and the rest of the stock market pigs tank again, no one save me and my fellow, bloodied shorts, is going to remember, no less be thankful for, the BS bear market rally of 2009.

No, everyone will be rampaging about with un-lubed pitchforks.



Down 70% from it's all-time high, shares substantially diluted, the dividend *suspended*, enough buried losses for the coming decade.....

Some *high note*!

Ken, I'd seriously consider a remote village in South America. Enlist the services of those who hid Steve Bartman or something.

I've written a bunch on Ken Lewis - click here.

And, as my South Philly jabronis would say, *not for anything*, but I identified Ken Lewis for the immense Moron that he was long before the rest of those clowns like Mike Shedlock and Barry Ritholtz did.

Stay with me kids, I'll keep y'all a few steps ahead of the game....

Personal Credit Crisis

Two days ago I was at the supermarket where my credit card *didn't work*. The cashier said I had a "contact issue".

Say what?

Then, later on my card didn't work at the gas station either.

So I pulled away from the pump and dialed Chase.

Apparently, my wife forgot to pay the bill due on June 25th. We happened to be away on vacation that week and the bill either didn't show or was lost. No big deal, right?

So I was already screaming at the customer service rep when she said it's always been their policy to *turn off* delinquent card holders.

That only made me more irate. I told her I'd had the card for 12 years and missed many a payment without them ever revoking my credit so she was full of sh*t.

CaptiousNut - It must be some new policy or something.

CustomerServiceStooge - No. It's not. It's been that way ever since I've been here.

CaptiousNut - How long have you been there?

CustomerServiceStooge - About a year.

CaptiousNut - Well I've had the card since 1997....It's never been *turned off* before. You need to turn my card back on right now or I'll never use it again.

Of course she couldn't. Like a knucklehead I demanded a *supervisor* who fed me some more BS - that they couldn't turn it on without a payment, that it had ALWAYS been their policy.

Fine I said. I got her name and told her not only would I never use the card again, that I'll use one of my other cards for everything henceforth....AND, for pure spite I may decide to not pay it at all and make them eat the 10 grand (2 months) balance.

Now there's no way I'd do that. As I said, I acted like a knucklehead but only because I was that PO'ed.

I have no problems paying the penalties and interest for a missed payment. But to turning the card off on a customer who's paid their bills for 12 years?

That's absolutely asinine!

My wife called up to yell at them as well. And get this, when complaining about them turning off our card without warning....they dropped this bombshell on Mrs. C-Nut:

"We have to.....the money we lend is UNSECURED."

No bleepin' crap it is. When the heck did the credit card industry finally realize that?!?!?!

So while today they are irrationally clamping down on creditworthy folk like myself....

Over the past several years, they let people like my Moronic landlord run up hundreds of thousands in debt on a dozen or so cards.

Just yesterday in the mail I could see a letter to him from one such company. Through the envelope it was easy to see his debt of just over $49,000.

So I've started using a dormant card in my wallet. Screw JP Morgan Chase, right?

But gosh darnit, the next card in my line-up is from Bank of America's MBNA....so that wanker Ken Lewis is going to make out on this.

Wall Street - It Really Is All Brawn, No Brains

Being a Masshole myself, and a little bit young, I don't remember Lenny Dykstra as a Met. But I witnessed him firsthand in Philly where he often put the entire team on his back in carrying them to the 1993 World Series. He was one baaaad dude; and did everything with a real *flair*:



Apparently he hasn't changed one bit. Today he's declaring bankruptcy in style as well:

Lenny Dykstra Files Bankruptcy

NEW YORK -- Lenny Dykstra, the former star center fielder for the New York Mets and Philadelphia Phillies, has filed for Chapter 11 bankruptcy protection.

The 46-year-old has no more than $50,000 of assets and between $10 million and $50 million of liabilities, according to a petition filed Tuesday with the U.S. Bankruptcy Court in the Central District of California.

Dykstra's filing comes in the wake of more than 20 lawsuits he faces tied to his activities as a financial entrepreneur, including The Players Club, a glossy magazine for athletes he had helped launch in 2008.

According to an April article on ESPN.com, Dykstra put his net worth at $60 million, and also owned a black Rolls Royce Phantom and Gulfstream II jet.

Walter Hackett, a lawyer for Dykstra, said the event triggering the bankruptcy filing was a planned foreclosure sale of a southern California residence that Dykstra bought from hockey legend Wayne Gretzky for $17.5 million in 2007.

According to the bankruptcy petition, Dykstra's largest unsecured creditors include units of JPMorgan Chase & Co., owed $12.9 million, and Bank of America Corp, owed a combined $4.2 million.

Hackett said Washington Mutual, now part of JPMorgan, was the main lender on the 2007 home purchase, and that the bank misled Dykstra about his ability to afford the property. The lawyer said the bank deserves nothing on its claim.

Hah! JP Morgan and Bank of America getting stiffed to the tune of millions at a clip?

Who'd a thunk it?

One just has to love the lawyer's defense - that *the bank misled Dykstra about his ability to afford the property*!!!

Now I had no idea that Lenny had re-fashioned himself into a *financial guru* and that Jim Cramer had gone long Dykstra. Pay attention to the funniest part - between the 13 and 30 second marks:



You thought you were watching a CollegeHumor or SNL parody there, right?

So did I.

Here's Cramer's money quote:

Now there are probably only four or five people in the world who if they sent me an email...told me to own(?) a stock....I would actually take them seriously....He's one of them.

What else is there to say?

Just keep shorting Cramer, Cramer pumps, and banks that lend to them!

[Looks like Forbes was onto this story last year.]

Last year, in Empiricism - The Only Science I discussed the fabulous book Moneyball which touched upon Lenny Dykstra. In that book Billy Beane admiringly contrasts himself - a can't-miss talent who flopped - with Lenny Dykstra who was an unorthodox, cocksure killer. If memory serves me, Beane was astounded learning one day that Lenny didn't even have a clue who the imposing (HOF-bound?) pitcher was for their upcoming game. Lenny was simply guts personified and a complete neanderthal.



Looks like a spot-on diagnosis for today as well - not that he's any different than the rest of the meatheads on Wall Street.

Remember Bear Stearns' Josh Weintraub?

Who's A Jumbo-Sized Moron?

If you live in a tony northeastern locale, as I do, you're surely aware that the high-end of the housing market is utterly falling apart. Inventory is piling up rapidly....and demand is absolutely *bid-less*. Homes in towns near me that would have sold for $1.6 million recently are now languishing at $1.2 million without any buyers in sight. And homes that would have sold for $1 million 18 months ago are now hitting the low 800s without moving.

To ask a stupid question:

Why are luxury homes in the process of falling off a cliff?

Well, look no further than this recent news item:

Bank of America Corp. was the largest jumbo lender in the first quarter, with almost $9 billion in new loans, followed by Citigroup, according to newsletter National Mortgage News. JPMorgan ranked sixth. San Francisco-based Wells Fargo & Co. was the top overall mortgage originator, followed by Bank of America, JPMorgan and Citigroup, the newsletter said.

So, just as jumbo borrowers were about to have their collateral walloped....

Ken Lewis decided to become the largest jumbo lender in the country!

Remember, this is the same guy who jumped head-first into subprime lending (er, legacy toxic debt) in July 2007 right when that market was starting to implode.

More:

Barbara Desoer, head of Bank of America’s mortgage unit, said in a March interview the bank was seeking to make more jumbo mortgages, offering "extremely competitive" rates to consumers. The Charlotte, North Carolina-based bank "has balance-sheet capacity and we’ve allocated it to jumbos given our presence in some of the states and regions where that’s important," she said. "We’re very much open for business."

Bank of America doesn’t now make jumbo mortgages through brokers or so-called correspondent lenders, only its "retail" channel, though that’s "under regular evaluation," said spokesman Rick Simon.

Let me ask y'all another question:

Is Bank of America in any position to be strutting *extremely competitive* on anything?

This Ken Lewis is an out-of-control lunatic....one whose ability to *read the cards* is non-existent. I'm sorry, you can't run a bank, no less one of the largest in the world, if you CAN'T GAUGE COLLATERAL.

This is the guy who declared 2007's fourth quarter the worst his company would ever see.

This is the guy who bought the less than worthless, aforementioned Countrywide.

This is the guy whose firm wrote over $110 billion in unsecured HELOCs in 2006 alone.

This is the Moron who paid a premium(!) for the disaster Merrill Lynch.

All one has to do is see his bets du jour to know where the next shoe's going to drop.

High end homes in *important areas*....see ya later!

See also - Refi'ing A Bubble.

And, for the master link on Kenny, my third favorite Moron - click here.

Bank Of America - Being Run Like Government!

As I mentioned in that previous post, I was out boozing on Friday night.

I met someone that works for Ken Lewis' Bank of America.

BACEmployee - Guess what....They (the Bank) are giving all the low end employees 2% raises across the board.

Okay. First of all, nobody at that bankrupt, bailed-out bank should be getting raises.

Secondly, bear in mind that *across the board* means that every employee between the pay range of $0 and, I don't know, maybe $50,000 in annual income is getting a bump. It means even if someone is a horrible employee on probation, their manager has to call them in and give them the *good news*. In other words, there are no doubt hundreds if not thousands of employees in this category about to be fired or laid off that will be wondering aloud soon, "How could that be? I just got a raise!"

Think about it. Automatic percentage pay hikes....what does this smell like?

To me, it smells like a creeping, de facto *unionization*.

The only rationale that Moron Ken Lewis could possibly have for doing this, is *politics*.

He doesn't run a bank; he runs a Big Government lending operation that's wholly dependent on tax breaks, continual bailouts, Federal Reserve liberality, and taxpayer largess ignorance.

He's not managing assets and liabilities; he's not managing loans and collateral....

Instead, he's managing *image* and *powers-at-be*!

Note that Ken Lewis is one of my favorite Morons. Click here to get started.