The plot thickens….Confirmed.. Fed Reserve Strongarmed BofA …

[davelj]

[quote=ucodegen]

Use DCF? Use DCF… yes, that’s a good idea but for the fact that… we don’t know yet what the CF (cash flow, that is) is going to be (although I’m sure BofA likes to pretend that they know).

You don’t know the exact cash flow on the loans, but you can bound them. You can’t predict the future 100%, but you can get an approximate idea, best worse case as well as probabilities of both.[/quote]

OK, “bound” those cash flows and explain to me how there’s any equity left in a company that’s levered 13-1 in which the assets are worth less than 92% of their book value. Please show me the math as to how that works out. That’s a rhetorical request.

[quote=ucodegen]

What, I don’t know… but not nearly as much as it used to be because SFR servicing is a money losing business right now.

No its not, it is probably the only winning business right now. You have virtually no liability and you collect fees on the passthrough. If you are servicing SFR mortgages, you don’t necessarily own them.. they are likely securitized. [/quote]

Servicing. Yeah, you just collect fees. It’s all candy and cake. Simplest business in the world. Do you know anyone who actually works in the serving industry? Servicing SUCKS right now. Why? Because servicing contracts are fixed fee contracts over long periods of time. When you’re collecting your 50 bps and delinquencies are 1%, yes, life is very good for servicers. When deliquencies are 5% and more and you have to hire a boatload more servicers to handle the extra workload – but you’re working on a fixed-fee contract – guess what? You’re losing money. And the only way to pretend that you’re making money is to revalue the servicing rights, which is just an accounting gimmick. One day servicing will be a decent business again. That day is a LONG way away.

I think there was some confusion regarding MAC clauses. I’ll assume that you understand that part, although your response in a previous post makes me wonder.

Countrywide was a horrible acquisition. BofA dramatically overpaid. I don’t know anyone in the business who doesn’t think so. Ken Lewis and a few sell-side shills are the only folks who are trying to spin Countrywide as a victory. Countrywide is one of the two reasons that Ken is being forced out. The second, and greater reason, is Merrill. That made a bad situation worse.

I’m not an expert on BofA. Then again, no one on the planet is, including the folks who work there. And that’s the problem. BofA is a giant black hole of risk that is unanalyzable. (Much like Merrill Lynch was. And how perfect… now they’re married.) No one can possibly understand that company enough to rationally invest money in it. Speculate? Absolutely. Invest? No way. Ask Warren Buffett… he’s only down 70% on his BofA position. In his defense, however, he purchased the stock before the Countrywide and Merrill acquisitions.

[ucodegen]

Ken Lewis and a few sell-side shills are the only folks who are trying to spin Countrywide as a victory

I wouldn’t consider it a victory. I think that Ken Lewis jumped the gun. I wish he had picked the desired assets after Countrywide BK or as a process of the BK. I don’t think many banks were comfortable enough to belly up to the table during this portion of the credit crunch and bid on those assets. This way he could shed the liability portion of Countrywide, or at least had a chance to cherry pick. I don’t think it is as bad as some people claim, but it is no victory.

If I remember correctly, BofA also loaned Countrywide about $2Bil near the start of the credit crunch. This had me scratching my head.

I can understand why Ken Lewis was looking at Merrill. BofA got Quick&Reilly to get the investment banking ‘arm’.. but Q&R was mostly personal and smaller accounts. Merrill would give them commercial. The problem is the price. I suspect the issue with Merrill was Ken Lewis jumping the gun again (like with Countrywide) combined with Merrill misrepresenting the state of its books. MAC was a way out until the Fed stepped in with the shotgun.

My opinion on Ken Lewis is that he is really no better nor no worse than many other bank CEOs. There are many that sank their ships. I do worry about who is going to be next. I also think that Ken Lewis was way overpaid for what he did, but I think that of a lot of CEOs. I think that most of the CEOs compensation should be in growth of their company (ie ownership of common), not salary, in-money-options etc.

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.

[ucodegen]

Ken Lewis and a few sell-side shills are the only folks who are trying to spin Countrywide as a victory

I wouldn’t consider it a victory. I think that Ken Lewis jumped the gun. I wish he had picked the desired assets after Countrywide BK or as a process of the BK. I don’t think many banks were comfortable enough to belly up to the table during this portion of the credit crunch and bid on those assets. This way he could shed the liability portion of Countrywide, or at least had a chance to cherry pick. I don’t think it is as bad as some people claim, but it is no victory.

If I remember correctly, BofA also loaned Countrywide about $2Bil near the start of the credit crunch. This had me scratching my head.

I can understand why Ken Lewis was looking at Merrill. BofA got Quick&Reilly to get the investment banking ‘arm’.. but Q&R was mostly personal and smaller accounts. Merrill would give them commercial. The problem is the price. I suspect the issue with Merrill was Ken Lewis jumping the gun again (like with Countrywide) combined with Merrill misrepresenting the state of its books. MAC was a way out until the Fed stepped in with the shotgun.

My opinion on Ken Lewis is that he is really no better nor no worse than many other bank CEOs. There are many that sank their ships. I do worry about who is going to be next. I also think that Ken Lewis was way overpaid for what he did, but I think that of a lot of CEOs. I think that most of the CEOs compensation should be in growth of their company (ie ownership of common), not salary, in-money-options etc.

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.

[ucodegen]

Ken Lewis and a few sell-side shills are the only folks who are trying to spin Countrywide as a victory

I wouldn’t consider it a victory. I think that Ken Lewis jumped the gun. I wish he had picked the desired assets after Countrywide BK or as a process of the BK. I don’t think many banks were comfortable enough to belly up to the table during this portion of the credit crunch and bid on those assets. This way he could shed the liability portion of Countrywide, or at least had a chance to cherry pick. I don’t think it is as bad as some people claim, but it is no victory.

If I remember correctly, BofA also loaned Countrywide about $2Bil near the start of the credit crunch. This had me scratching my head.

I can understand why Ken Lewis was looking at Merrill. BofA got Quick&Reilly to get the investment banking ‘arm’.. but Q&R was mostly personal and smaller accounts. Merrill would give them commercial. The problem is the price. I suspect the issue with Merrill was Ken Lewis jumping the gun again (like with Countrywide) combined with Merrill misrepresenting the state of its books. MAC was a way out until the Fed stepped in with the shotgun.

My opinion on Ken Lewis is that he is really no better nor no worse than many other bank CEOs. There are many that sank their ships. I do worry about who is going to be next. I also think that Ken Lewis was way overpaid for what he did, but I think that of a lot of CEOs. I think that most of the CEOs compensation should be in growth of their company (ie ownership of common), not salary, in-money-options etc.

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.

[ucodegen]

Ken Lewis and a few sell-side shills are the only folks who are trying to spin Countrywide as a victory

I wouldn’t consider it a victory. I think that Ken Lewis jumped the gun. I wish he had picked the desired assets after Countrywide BK or as a process of the BK. I don’t think many banks were comfortable enough to belly up to the table during this portion of the credit crunch and bid on those assets. This way he could shed the liability portion of Countrywide, or at least had a chance to cherry pick. I don’t think it is as bad as some people claim, but it is no victory.

If I remember correctly, BofA also loaned Countrywide about $2Bil near the start of the credit crunch. This had me scratching my head.

I can understand why Ken Lewis was looking at Merrill. BofA got Quick&Reilly to get the investment banking ‘arm’.. but Q&R was mostly personal and smaller accounts. Merrill would give them commercial. The problem is the price. I suspect the issue with Merrill was Ken Lewis jumping the gun again (like with Countrywide) combined with Merrill misrepresenting the state of its books. MAC was a way out until the Fed stepped in with the shotgun.

My opinion on Ken Lewis is that he is really no better nor no worse than many other bank CEOs. There are many that sank their ships. I do worry about who is going to be next. I also think that Ken Lewis was way overpaid for what he did, but I think that of a lot of CEOs. I think that most of the CEOs compensation should be in growth of their company (ie ownership of common), not salary, in-money-options etc.

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.

[ucodegen]

Ken Lewis and a few sell-side shills are the only folks who are trying to spin Countrywide as a victory

I wouldn’t consider it a victory. I think that Ken Lewis jumped the gun. I wish he had picked the desired assets after Countrywide BK or as a process of the BK. I don’t think many banks were comfortable enough to belly up to the table during this portion of the credit crunch and bid on those assets. This way he could shed the liability portion of Countrywide, or at least had a chance to cherry pick. I don’t think it is as bad as some people claim, but it is no victory.

If I remember correctly, BofA also loaned Countrywide about $2Bil near the start of the credit crunch. This had me scratching my head.

I can understand why Ken Lewis was looking at Merrill. BofA got Quick&Reilly to get the investment banking ‘arm’.. but Q&R was mostly personal and smaller accounts. Merrill would give them commercial. The problem is the price. I suspect the issue with Merrill was Ken Lewis jumping the gun again (like with Countrywide) combined with Merrill misrepresenting the state of its books. MAC was a way out until the Fed stepped in with the shotgun.

My opinion on Ken Lewis is that he is really no better nor no worse than many other bank CEOs. There are many that sank their ships. I do worry about who is going to be next. I also think that Ken Lewis was way overpaid for what he did, but I think that of a lot of CEOs. I think that most of the CEOs compensation should be in growth of their company (ie ownership of common), not salary, in-money-options etc.

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.

[davelj]

[quote=ucodegen]

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.[/quote]

Undoubtedly.

[quote=ucodegen]

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.[/quote]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share. Since the end of the third quarter of 2008 he has liquidated 5 million shares into a falling market for a loss. Obviously the shares he still owns have roughly a 70% loss in them right now. We won’t know until the end of the year exactly how many shares he still owns. But he’s lost a lot more than 30% on his position.

[davelj]

[quote=ucodegen]

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.[/quote]

Undoubtedly.

[quote=ucodegen]

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.[/quote]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share. Since the end of the third quarter of 2008 he has liquidated 5 million shares into a falling market for a loss. Obviously the shares he still owns have roughly a 70% loss in them right now. We won’t know until the end of the year exactly how many shares he still owns. But he’s lost a lot more than 30% on his position.

[davelj]

[quote=ucodegen]

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.[/quote]

Undoubtedly.

[quote=ucodegen]

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.[/quote]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share. Since the end of the third quarter of 2008 he has liquidated 5 million shares into a falling market for a loss. Obviously the shares he still owns have roughly a 70% loss in them right now. We won’t know until the end of the year exactly how many shares he still owns. But he’s lost a lot more than 30% on his position.

[davelj]

[quote=ucodegen]

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.[/quote]

Undoubtedly.

[quote=ucodegen]

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.[/quote]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share. Since the end of the third quarter of 2008 he has liquidated 5 million shares into a falling market for a loss. Obviously the shares he still owns have roughly a 70% loss in them right now. We won’t know until the end of the year exactly how many shares he still owns. But he’s lost a lot more than 30% on his position.

[davelj]

[quote=ucodegen]

BofA is a giant black hole of risk that is unanalyzable.

I think that this applies to more than just BofA.[/quote]

Undoubtedly.

[quote=ucodegen]

Ask Warren Buffett… he’s only down 70% on his BofA position.

I think he may be down more than 30%.. he was buying when it was in the 30s (price before Countrywide and Merrill). It is presently bouncing between 16 and 17. I haven’t checked to see if he added to his position in March 09 though.[/quote]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share. Since the end of the third quarter of 2008 he has liquidated 5 million shares into a falling market for a loss. Obviously the shares he still owns have roughly a 70% loss in them right now. We won’t know until the end of the year exactly how many shares he still owns. But he’s lost a lot more than 30% on his position.

[ucodegen]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share.

Sorry, I misread your 70% down as currently 70% of what it cost.. my mistake.

[ucodegen]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share.

Sorry, I misread your 70% down as currently 70% of what it cost.. my mistake.

[ucodegen]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share.

Sorry, I misread your 70% down as currently 70% of what it cost.. my mistake.

[ucodegen]

I’m not sure where you’re getting your numbers. Buffett bought a little over 10 million shares of BofA during 2008 for around $500 million, so his cost basis was almost $50/share.

Sorry, I misread your 70% down as currently 70% of what it cost.. my mistake.

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