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Bank of America: Insolvent and everyone knows it now

August 23, 2011

Moynihan stares into the Abyss

We’ve been on the “Bank of America is Insolvent” deathwatch for a long time, here at the Traders Crucible.

First, on 12/24/2010, TC noted BoA was an obvious target for nationalization in our Strategic Ideas.

Then, back on 12/28/2010, the suit by Allstate for securities fraud was said to be the beginning of the end for BoA, after noting earlier in the day that Banks had tens of billions of dollars of obvious losses they were not reporting.

We let this one go for a while, but then on 6/13/2011, noted the BoA insolvent was picking up steam, and that it would be widely accepted very soon.

Here we are with BAC stock trading down 60% from late December.   And people are talking about it everywhere…

 

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  1. August 24, 2011 at 6:24 pm

    I hope they have the sense to just nationalize them this time instead of propping them up. Make the banks’ balance sheets reflect the market value of their assets and there’ll be a few more of them joining BoA.

  2. TC
    August 24, 2011 at 6:40 pm

    As far as I can tell, there is no plan. What’s the plan if they go under?

    • Clonal Antibody
      August 24, 2011 at 8:19 pm

      See this 2009 Wharton article – Has the Time Come to Nationalize Struggling Banks? Yes, but Carefully

      After a generation of increasingly relaxed regulation of the financial services sector, the very concept seems stunning: Nationalization of banks in Europe and the United States. But with many global banks still teetering on the brink of insolvency — even after rescue efforts that have included multi-billion dollar infusions of capital and other forms of assistance — a growing number of economists now argues that government takeovers of the most deeply troubled institutions, at least temporarily, may be the only remaining solution.

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