Now It’s BofA’s Turn. Plus, Bob Johnson Knows Everything
So Bank of America reported first quarter earnings today, and the news, as you might guess was not good. This big number: 77 percent drop in profits (Still, the bank made $1.23 billion). The news has pulled down the entire stock market. You gotta love the persnickety perspective of the New York Times, which could barely disguise its glee:
Monday’s announcement represented the third consecutive drop in earnings for the firm, as its outsized ambitions to rival Wall Street’s traditional financial giants instead hurt the bank again. Bank of America said it lost $1.3 billion in its trading activities, a reversal from the $1.6 billion it earned at the same time last year.
The mortgage market is killing the bank, and now BofA is also very worried about the average Joe's ability to pay off home-equity loans and the like. The bank has set aside over $6 billion to cover potential unpaid debts. That's, um, not good. The good news (well, kinda):
Revenues at the consumer bank rose 17 percent. Yea, fees!
Meanwhile, and this slipped past me a couple weeks ago, BofA is paying Countrywide's David Sambol $28 million to stay on and run the mortgage unit after BofA's $4 billion acquisition of Countrywide is complete. Would this be the same Countrywide that might have gone under if BofA had not bought it? Yes, it would.
This should be a fun week for Charlotte's big banks. Both host their annual shareholder meetings.
And, oh yes, Bob Johnson, he who has lost a reported $50 million with the Bobcats so far, knows everything there is to know about business. (We're honestly not trying to pick on the guy, and we actually appreciate his candor, but he's making it so easy.)