The two sides are reportedly at odds over whether or not Bank of America should have to pay a cash penalty for Countrywide Financial and Merrill Lynch's securities dealings. The three entities combined to issue $965 billion in mortgage-backed securities to private investors from 2004 to 2008, well ahead of other major banks. Countrywide issued nearly 75% of this, and Bank of America issued a mere 4% of the $245 billion in securities that have defaulted or become severely delinquent.
Bank of America has offered $13 billion to end the government's probe into the mortgage-securities situation. The bank has already paid for some of Countrywide and Merrill Lynch's actions but does not think it should pay too severely, according to the Journal report.
Bank of America has already paid approximately $60 billion for problems tied to the recent financial crisis.
The stock was down 0.42% to $15.44 at 11:57 a.m.
Separately, TheStreet Ratings team rates BANK OF AMERICA CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate BANK OF AMERICA CORP (BAC) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for BANK OF AMERICA CORP is currently very high, coming in at 86.47%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BAC's net profit margin of 9.28% significantly trails the industry average.
- BAC, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, BANK OF AMERICA CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: BAC Ratings Report