Bank Of America Settling Suits
Bank of America (NYSE:BAC) is doing its part to put the Merrill Lynch bonus issues behind it. The Charlotte, N.C. based bank has paid $150 million to settle a lawsuit brought against it by the SEC. The company has been under heat since late last year due to $3.6 billion in bonuses paid out to Merril Lynch executives after the company was taken over by BAC.
BAC neither admitted or denied any wrongdoing as part of its agreement.
BAC shares have continued to rise in shares, despite the numerous troubles facing the firm. One of the biggest areas hurting the bank is the continued deterioration of credit quality.
BAC has a huge exposure to the US mortgage market, a segment that continues to perform poorly.
Credit card defaults are also on the rise. Bank of America (NYSE:BAC) has the dubious distinction of having the worst performing credit card portfolio of any of the major banks. Unlike JP Morgan Chase Co (NYSE: JPM) and American Express, BAC has avoided the asset-backed securities market that it used last year to receive $13.7 billion. The quality of BAC's credit card portfolio is so poor that the company can not sell TALF bonds without being labeled a sub-prime lender.
BAC's July credit card default rate was 13.82, much higher than its large rivals.
Investors appear to be largely ignoring the bad news, figuring that much of it is already priced into share prices.
BAC is currently trading for $17.86 a share. That's down from a 52 week high of $39.50.
Courtesy: WSE
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