Bank of America said its unresolved mortgage putback claims totaled $16.648 billion as of June 30, down from $17.135 billion the previous quarter, mainly reflecting the MBIA settlement. But the company estimates the actual losses on mortgage repurchase claims "could be up to $4 billion over accruals at June 30, 2013," according to its second-quarter 10-Q filing.
Brokerage and Asset Management
Lewis also was eager to acquire Merrill Lynch in September 2008, with Bank of America agreeing to acquire the nation's largest retail brokerage firm for $50 billion in stock, the same weekend that Lehman failed in September 2008. The deal was completed in January 2009, in exchange for $29.1 billion in common and preferred stock. Bank of America issued 1.4 billion common shares for about $20.5 billion, to complete the Merrill Lynch acquisition. Bank of America was among the group of nine large banks in October 2008 that were pretty much forced by former Treasury Secretary Henry Paulson to accept government bailout funds through the Troubled Assets Relief Program, or TARP. Bank of America initially received $15 billion in TARP money, followed by another $35 billion in January 2009, after the Merrill Lynch acquisition was completed. Bank of America raised an additional $25 billion in common equity before completing its full repayment of TARP in March 2010.
One may wonder what Bank of America got for all of this, aside from the huge devaluation of shareholders. For one thing, the company still has the largest U.S. branch network, even though Wells Fargo more than doubled in size through its acquisition of the troubled Wachovia in 2009. Bank of America also has the largest retail brokerage network, because of the Merrill Lynch acquisition, which also grew its investment banking business. The bank's investment and brokerage service revenue totaled $11.4 billion during 2012, increasing from $5.2 in 2007. Investment banking revenue increased to $5.3 billion in 2012 from $2.3 billion in 2007. For the first half of 2013, the numbers looked very encouraging, with investment and brokerage revenue of $6.3 billion and investment banking income of $3.1 billion. Moynihan is well on his way to realizing the $8 billion in annual expense savings through the "Project New BAC" efficiency program he announced during 2011. The company expects its annual expense savings to reach $6 billion by the end of this year.