Jim Cramer: I Wish I Could Be More Negative on Bank of America

NEW YORK ( Real Money) -- There's nothing like a hated story. As I signed books last night at the 92nd Street Y in Manhattan, perhaps one of the most knowledgeable audiences you are ever going to get, I again met with great resistance to my idea of buying Bank of America ( BAC).

Understand that there's no derision to the push. No one says, "You have no idea what you are doing." That kind of critique typically has to do with my insistence that I can't find a metric to justify getting behind Twitter (TWTR). People want me to foment one. That's what you do when you are desperate to get behind momentum, and I have enough problems staying behind Amazon (AMZN) and Netflix (NFLX) -- and particularly so for the latter after that net-neutrality change. That apparently could cause Netflix to raise prices, but for all the wrong reasons. The stock has been a terrific play on net neutrality, as it is often reported to consume one-third of peak Internet use.

No, it is Bank of America that people don't trust. Here's the skinny on the pushback.

First, the company is run by someone who doesn't know how to run a bank. I think the Bank of America that Brian Moynihan inherited was entirely dysfunctional, put together on the fly, with the worst possible acquisition of the era: the $4 billion stock purchase of Countrywide. That target, which financed 20% of the 2006 mortgages, was more than worthless. We don't have the exact tally, but it is entirely possible that almost all of these mortgages defaulted, as that was the worst vintage possible. I don't know a soul who could have managed that poison pill properly, and it took forever to work through the system.

Two: The liabilities haven't gone away. Judging by the $2 billion litigation expense in the fourth quarter, this could be the beginning of a second round of mortgage putbacks and struggles with the authorities. It is true that there are more issues to settle. There could be more liabilities, as well, based on some recent settlements with JPMorgan Chase (JPM) that could indicate BofA still owing as much as $8 billion -- the sums are all over the place. But BofA made $3 billion after the litigation charge, and it could handle $8 billion incredibly easily.

Three: There is still no dividend to speak of, and BofA seems reluctant to put a larger one through. All I can say is, the size of the dividend is not up to Bank of America. Lots of people think the regulators have gone away, but that's not so for banks that were in as much trouble as Bank of America was. The last time BofA was in this good a shape was in 2006, when it paid a dividend north of $2 a share. At this run rate, that's certainly a possibility once again. The stock would have a gigantic yield if it could pay that again and I think, eventually, it will.

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