Bank of America story updated with Wednesday's price action in the 13th paragraph..NEW YORK ( TheStreet) - Bank of America may have had a dismal 2011, but you haven't seen nothing yet. The thinking on Bank of America has long been that valuations are so low, the stock can't get any lower--and then lower it goes. The problem, by and large, has been mortgage risk. Bank of America can't ever seem to get a handle on how much exposure it has. The number just keeps growing and growing.
Bank of America CEO Brian Moynihan tried to assuage investor concern over this issue in a speech to investors earlier this month. "With the uncertainty around some of the economies in the world, what's going
on in Europe on a given day, what could happen in the U.S., we continue to position ourselves and make sure that we are in good shape to last through anything we see ahead," he said. Looking at the combined Bank of America Merrill Lynch balance sheets from the third quarter of 2008, Moynihan said loans were at $1 trillion, and are 17% lower today. The loans are of better quality, he says, funding is less short term than it used to be, he says. And yet, you still have analysts like Deutsche Bank's Matt O'Connor predicting the bank will have to issue $15 billion worth of stock next year. It doesn't take a Bank of America-related disaster to send the stock lower. Wednesday's action was a good indicator of this fact , as Bank of Americas shares were down 1.69% about 75 minutes before the close as Europe-related tumult continued to roil the stock market. Shares of JPMorgan Chase ( JPM) and Wells Fargo ( WFC), meanwhile, were in positive territory. Will Bank of America survive the coming market disaster? Probably, but let's get real, folks: this is not a canoe you want to be sitting in when the storm comes across the Atlantic. -- Written by Dan Freed in New York. Follow this writer on Twitter.