Bank of America Corporation (NYSE: BAC) has put itself right in harm’s way if you have been watching its share price over the last week (and longer). Ken Lewis is either going to be a hero or a zero for the acquisitions of Countrywide and then Merrill Lynch. The shareholder suits that are going to be coming down the pike may now end up making Lewis a zero. The sad thing is that Lewis was one of the few who made the predictions long before the blow-up that in the future we would realize we did some pretty stupid things on lending.
Bank of America shares are lower by more than 15% to $5.95 this morning. This was a $14 stock at the start of 2009. This does not just mark another 52-week low. This takes B of A down to levels of the early to mid-1990’s. Its prior 52-week trading range was $7.00 to $45.08, so shares are down more than 80%.
Stifel, Nicolaus & Co. downgraded the company to hold from buy overconcerns over additional government investments and fears ofadditional credit costs.
Meredith Whitney has said that B of A uses the most conservativeassumptions on lending and forward values, but it is as vulnerable asany with it interfacing with one in two customers in the U.S.
The weekend reports of layoffs being "several thousand" have become about 4,000 from the capital markets group.
Jon C. Ogg
January 20, 2009
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