This Day On The Street
Continue to site
ADVERTISEMENT
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

Bank of America's Latest Day From Hell

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report) shares plunged 20.07% Monday, as investor concerns continued to snowball amid a market selloff, a lawsuit from AIG (AIG - Get Report) and the sale of more than seven million shares by hedge fund Appaloosa Management.

Analysts including Citigroup's Keith Horowitz defended the stock , though CLSA's Mike Mayo downgraded the stock arguing the bank may need to raise equity, according to a report in The New York Times.

Appaloosa Management, the multibillion dollar hedge fund run by former Goldman Sachs trader David Tepper, sold his Bank of America (BAC - Get Report), sold more than 7 million shares, reducing its stake to 10 million shares as of the end of June, according to a filing with the Securities and Exchange Commission Monday. A person close to the fund says Appaloosa has cut its stake further since that time.

AIG says in its lawsuit, filed in New York State court Monday, that fraud by Bank of America and Countrywide cost AIG some $10 billion in losses on $28 billion in residential mortgage backed securities (RMBS) investments. AIG is seeking to recoup at least that amount.

The lawsuit is only the latest of tens of billions in similar claims brought by a host of high profile plaintiffs including government sponsored enterprises Freddie Mac (FMCC.OB) and Fannie Mae (FNMA.OB), as well as private companies including BlackRock (BLK), PIMCO and Goldman Sachs (GS).

Bank of America sought to defend itself against the AIG allegations in a statement sent to TheStreet.

"AIG recklessly chased high yields and profits throughout the mortgage and structured finance markets. It is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors. We reject its assertions and allegations," the statement read.

As for Monday's selloff, spokesman Jerome Dubrowski said that while the bank has a policy of not commenting on its share price moves, the bank is "a much stronger company today than it was a year ago and two years ago."

He says the bank has "significantly strengthened" its balance sheet, liquidity and regulatory capital ratios, while upping its reserves for RMBS "putbacks" to $18 billion at the end of the second quarter from $4 billion a year earlier.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AIG $58.61 -1.41%
BAC $16.50 -1.02%
AAPL $130.28 -1.14%
FB $79.19 -1.19%
GOOG $532.11 -1.42%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs