When Bank of America announced its purchase of Merrill Lynch, it became both physically and psychologically one of the strongest banks on Wall Street.
But it seems that even the consumer banking giant has been hurt by the past two weeks’ financial turmoil, as today it announced that it slashed its quarterly dividend and plans to raise $10 billion in new capital.
Well, at least BofA admitted it needed more capital unlike some former banks (*cough*Lehman*cough*Merrill).
WSJ: [BofA] conceded that “recessionary conditions” are sending tremors though the bank.
The troubles hint at a horrific earnings season and show how much the deepening woes of consumers are weighing on the nation’s biggest retail bank as it grapples with rising delinquencies in everything from mortgages to credit cards to small business loans.
As it turns out, even Bank of America’s heft and diversity are not enough to get it through the worst financial crisis in at least two decades. The sacrifice of its long-sacrosanct dividend is further evidence that the nation’s economic troubles could get worse before they get better.
“It’s a damn disaster,” Chief Executive Officer Kenneth Lewis told analysts, when asked about lending conditions. “We are making every good loan we can find” but “it’s not going to be pretty for a while.”
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