Analysts, such as Paul Miller of FBR Capital Markets, now consider the settlement to be at risk, even as new, unexpected lawsuits come out of the woodwork. On Monday, a $10 billion lawsuit from
--along with a sharp market selloff--combined to drive down Bank of America shares more than 20%.
Most analysts appear to believe the bank will weather this storm even if, like Dick Bove of Rochdale Securities, they are neutral on the stock.
"The company has something like $140 billion in cash--that's pure cash--and that pool of cash is big enough if 2008 style a whole bunch of people knocked on the door and said give me my money back, they have more than enough money to take care of those demands," Bove says.
Another analyst with a "neutral" rating. Nomura Securities' Glenn Schorr, also offered some defense of the stock in a note published Tuesday after meeting with CFO Thompson, arguing Monday's 20% selloff "seems overdone."
But Schorr also offered an important caveat.
"We've all learned the hard way to never say never (from 2008) given forward earnings power, the coming cost saves, active (asset sales) and passive (run-off) mitigation efforts, and a long Basel phase-in period, management sees no need to raise capital at this time.
Given Bank of America's $6.77 share price as of Wednesday's close, one has to wonder what would happen if they did.'
Written by Dan Freed in New York