ZeroHedge Asks the Tough Questions of BofA and Repo 105s, Inquiring Minds Want to Know

By: Reggie Middleton | Wed, Mar 24, 2010
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A recent ZeroHedge article (Bank Of America Can Not Deny It Used Repo 105, Response From PricewaterhouseCoopers Pending; The BofA QSPE's) probes the possibility of BofA engaging in Repo 105-like activities in regards to their QSPEs (off balance sheet vehicles). ZH does seem to uncover a lot of dirt these days. After reading the article, I think it is worth blog fans time to delve deeper into the off balance sheet world of BofA. Here are some older blog posts that ask the hard questions and raises some additional ones.

And the next AIG is... (Public Edition, and yes, I know there is a typo in Mr. Tizzio's name) Free registration required to access the naked swap note.

I have posted this warning of Bank of America's naked swap writing to my subscribers a few weeks ago. Since BAC is reporting this week, I have decided to make my suspicions public. I have found evidence that this bank has $32 billion of naked (as in apparently unhedged) swaps on its books - just like AIG. The difference is this bank is bigger, probably has more exposure, and has already been bailed out - several times. Oh, did I mention the insured collateral is nearly half BBB rated or lower??? How about extreme management issues at the top, and I mean all the way to the top (the CEO may actually bring down the ex-treasury secretary and maybe even the Fed Chairman. A trunk full of junk, surrounded by drama! It should be an interesting conference call tomorrow when they report, that is if anybody decides to ask the right questions...

If a Bubble Bubble Bursts Off Balance Sheet, Will Anyone Be There to Hear It?: Pt 3 - BAC (the bank

Bank of America securitizes residential mortgages, commercial mortgages, credit card receivables, and home equity loans and automobile loans that it originates or purchases from third parties. As of June 30, 2009, the total principal balance outstanding of securitized portfolio was nearly 1.7 trillion (including 1.1 trillion of mortgage backed securities, securitized by Government sponsored entities). The total senior securities and subordinated securities held by BAC on its balance sheet amounted to about $27 billion (28% of tangible equity) and $10 billion (10% of tangible equity), respectively.

Key observations

Well, it looks as if I was onto something in Banks Swallow Another $30 billion or So in More Losses as Their Share Prices Surge (Again).

From Bloomberg:

March 5 (Bloomberg) -- Fannie Mae and Freddie Mac may force lenders includingBank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. to buy back $21 billion of home loans this year as part of a crackdown on faulty mortgages.

For the sake of nostalgia, an old post reviewing B of A's quarter last year,A Glance at the Bank of America recent quarter.

 


 

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Author: Reggie Middleton

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