Well, this is quite something.
Earlier, I wrote a post in which I explained why Bank of America’s stock is collapsing.
I explained that the stock is collapsing because the market doesn’t believe that Bank of America’s assets are worth what Bank of America says they are worth. I included some analysis from Zero Hedge and Yves Smith focused on different Bank of America assets with some logic on why they might not be worth what Bank of America says they are worth.
And now—get this—Bank of America is apparently blaming its stock collapse on ME!
I was eating a tuna sandwich when I saw the news blip across Bloomberg TV. I almost choked.
Bank of America’s statement apparently says that I am making “exaggerated and unwarranted” claims.
But I’m actually not “claiming” anything (read the post here). I’m just pointing out what seems to me to be self-evident, which is that the market doesn’t believe that Bank of America’s assets are worth what they say they are worth. (Bank of America took specific issue with some asset exposures I relayed from Yves Smith, saying they were vastly overstated. And it turns out that one of Yves’s numbers was indeed wrong. I’ve corrected it in the post, and I apologise for the mistake.)
Lest some folks at Bank of America actually believe that the bank’s collapsing stock price has something to do with me, I should point out that the stock is down all of 16 cents, or 2%, today. That’s following an 8% collapse yesterday. And a 50+% collapse so far this year. And an 85%+ collapse in the past 5 years.
Now, anytime a bank stock tanks, a whole host of excuses are usually trotted out. Generally, the blame is placed on “shortsellers.” This is the first time in 20 years around the markets that I’ve seen the blame placed on a blog post (or, for that matter, me).
For what it’s worth, I am not a “shortseller” of Bank of America stock.
In fact, thanks to the fact that Bank of America bought a company I used to work for, Merrill Lynch, I am actually a Bank of America shareholder. (Not a huge one, thank goodness, but a big enough one that I would prefer Bank of America’s stock to be going up).
As a Bank of America shareholder, I am furious that Bank of America once again appears to be headed down the tubes, especially because the bank had several years before the financial crisis and two years after the financial crisis to raise tons of capital and write its assets down to levels that could never be questioned by the market.
The fact that Bank of America did neither of those things has already cost me and other shareholders our shirts. It’s also why we as a nation are having to waste our time worrying about Bank of America again (as if there weren’t enough other more important things to worry about).
I hope Bank of America is right about its asset values. I hope the market is wrong about them. I hope Bank of America’s stock recovers and recoups some value for us shareholders. I hope the government doesn’t have to step in again to prevent Bank of America from going bust and taking the whole economy down with it.
But in the event that Bank of America’s stock continues to collapse, I also have a plan for fixing the problem once and for all.
In case you’re curious, here it is. The management of Bank of America won’t like it, but I think it’s a fair plan.
In the meantime, I’m going to finish my lunch and try to get over my shock that a bank with $2.2 trillion of assets and 300,000 employees is actually issuing statements blaming its collapsing stock price on me.
Is this the Twilight Zone?