This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration. Need a new registration confirmation email? Click here
NEW YORK (
Bank of America(BAC - Get Report) shares dropped below $10 amid a sharp selloff in bank stocks Friday afternoon.
Bank of America shares have been on a steady decline since last fall, when investors became concerned about the bank's exposure to legal claims by investors in mortgage backed securities stuffed with home loans that were fraudulent or did not meet the promised underwriting criteria.
Bank of America has already announced more than $12 billion in settlements with various parties related to these "representations and warranties," and last month set aside and additional $5.5 billion toward future claims, while announcing it would record an additional $6.4 billion in "other mortgage-related charges." While
JPMorgan Chase(JPM - Get Report) are not without their share of mortgage-related pain,
Bank of America is in an unfortunate class of its own in this area.
The bulk of the write-downs and losses are the result of Bank of America's 2008 acquisition of Countrywide Financial, a star-crossed deal that cost some $4 billion, but which
analysts estimate will end up costing at least $30 billion to clean up.
While second quarter bank earnings got off to an auspicious start on Thursday and early Friday following better-than-expected numbers from JPMorgan Chase and
Citigroup(C - Get Report), bank stocks went south following Citigroup's conference call, when analysts raised questions about higher-than-anticipated expenses. Citigroup CFO John Gerspach said they were due to legal costs and a weak dollar, though he gave few details about the nature of the legal costs.
While at their lowest level in some two years, Bank of America shares are still well above their post crisis lows of early 2009, when they traded below the $4 mark. Bank of America will report second quarter earnings on Tuesday.
Written by Dan Freed in New York.