This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Bank of America's Fourth Quarter Can't Go Well -- and Won't (Update 2)

With both Citigroup (C) and JPMorgan posting poor fourth quarter trading results, it is hard to imagine how Bank of America could do much better. Even if it did, investors would probably view the feat as an unsustainable one-time event. No one is looking for Bank of America to turn into a trading powerhouse -- if such an animal can even be said to exist anymore given how severely new regulations (or merely the threat of them) have clipped the wings of Wall Street traders.

What analysts and investors are hoping to see from Bank of America is evidence that it is putting mortgage litigation risk behind it.

But how can the bank possibly provide such evidence? Don't expect positive news from negotiations between Bank of America and government-sponsored enterprises Fannie Mae (FNMA.OB)and Freddie Mac (FMCC.OB). Not when the Federal Housing Finance Agency, which oversees the mortgage giants, is under criticism from its inspector general for failing to challenge a $1.35 billion settlement between Bank of America and Freddie Mac over mortgage repurchase clams.

Some analysts are hoping for finalization of a long ago-proposed $25 billion deal regarding mortgage servicing abuses between the banks and attorney generals from a majority of the 50 states in the U.S. Still, a big settlement is hard to envision when attorneys general from several states, including New York, Massachusetts and Delaware, refuse to go along with a deal.

"We look forward to doing whatever it takes to obtain servicing reforms -- whether through a negotiated deal with banks or through regulations issued by the federal Consumer Financial Protection Bureau. But we will not release claims that we are currently investigating," wrote New York Attorney General Eric Schneiderman and his Delaware counterpart Beau Biden in an essay for Politico.

In addition to mortgage servicing, Schneiderman and Biden are investigating securitization, origination and "the Frankenstein's monster of a recording system called the Mortgage Electronic Registration Systems," they wrote.

JPMorgan, which has far fewer problems than Bank of America, saw its mortgage-related legal costs rise during the quarter, casting an ominous cloud over Bank of America's coming report.

Some analysts are hoping for resolution of Bank of America's proposed $8.5 billion settlement of mortgage litigation between Bank of America, Goldman, BlackRock (BLK), Pimco and other large institutional money managers. But with Schneiderman, the FDIC and others arguing against the proposed settlement, it is hard to imagine the deal will go through as proposed.

2 of 3

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BAC $15.31 0.00%
GS $188.06 0.00%
JPM $59.55 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs