Bank of America Posts Loss of $5.2 Billion After Firm Repays Bailout

January 20, 2010 by · Leave a Comment
Filed under: Industry News 

The market sold off strong today on 3 big banks (Wells, Morgan and BofA) all reporting losses and increasing of loan loss reserves.  This throws a wrench in the whole recovery picture and brings uncertainty into the market which creates volatility.  Goldman Sachs reports tomorrow and that will be very important, if they post huge losses then it will weigh on the markets and we could see the real correction everyone has been talking about coming true.

Bank of America Corp., the largest U.S. lender, posted a quarterly loss and its first full-year deficit in more than two decades, driven by the cost of repaying U.S. bailout money and defaults on consumer loans.

The fourth-quarter loss including the cost of exiting the Troubled Asset Relief Program widened to $5.2 billion, or 60 cents a share, from $2.4 billion, or 48 cents, a year earlier, according to a statement. Excluding TARP costs, the deficit was $194 million, the third in the past five quarters for the Charlotte, North Carolina-based lender.

New Chief Executive Officer Brian T. Moynihan has promised a “DNA change” as the firm focuses on operations instead of takeovers and bailouts. Credit cards and home lending were both unprofitable, the bank said. Costs tied to bad loans declined from the third quarter, and the bank said it benefited from gains at investment and brokerage services.

“Economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth,” Moynihan said in the statement. “We are encouraged by signs the economy is improving, as we have seen in the stabilization of our credit costs, particularly in the consumer business.”

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