NEW YORK (
Bank of America
received its second downgrade on Friday, with Standard & Poor's equity analyst Eric Oja cutting his recommendation to hold from strong buy. Oja's downward revision follows an
by Wells Fargo analyst Matt Burnell.
Bank of America shares are down nearly 40% this year.
In a brief note explaining his lower recommendation, S&P's Oja cites Bank of America's second quarter 10-Q earnings report, filed with the
Securities and Exchange Commission
late Thursday. In the filing, Bank of America states that
have become "
" in negotiations over problem mortgage-backed securities that they bought from the giant bank. As a result, Bank of America warns, its loss estimates "may materially change in the future based on factors outside our control."
Oja believes the tougher stance by the government-sponsored enterprises "could raise the costs of these claims." Bank of America sold the GSEs $1.1 trillion in mortgage-backed securities between 2004 and 2008, 11% of which have defaulted or are at least 180 days overdue.
Oja also cites a lawsuit filed late Thursday, in which New York Attorney General Eric Schneiderman asks a state court to
between Bank of America and 22 big institutional investors, including
"Our previous recommendation on
Bank of America had been based on our view these costs were contained and quantifiable, but we no longer have this view," Oja writes.
-- Written by Dan Freed in New York
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.