Bank of America Leads Bank Stocks Into Gutter As Ken Lewis Gets Chatty
Bank of America (NYSE:BAC) shares shed 19.2% of their value yesterday on a day that was particularly brutal for financial institutions on Wall Street. Investors didn't care for details of Timothy Geithner's vision of a financial bailout, and stocks were hammered as a result.
Bank of America (NYSE:BAC) CEO Ken Lewis sent a prepared statement to Congress yesterday in which he defended BAC's record, and said the company is loaning money.
“Notwithstanding these headwinds, the new loans we made in the fourth quarter included: $59 billion in commercial loans; Nearly $7 billion in commercial real estate loans; $45 billion in mortgages; Nearly $8 billion in domestic card and unsecured consumer loans; More than $5 billion in home equity products; About $2 billion in consumer Dealer Financial Services (auto, marine, RV loans). And nearly $1 billion in new credit to more than 47,000 new Small Business customers,” wrote Lewis.
All the heads of major banks are expected to tell Congress the exact same thing: we are lending to credit worthy customers. With the average consumer up in arms about the deteriorating condition of the economy, bank heads have become an obvious target.
Congress is also expected to delve into the controversial subject of executive compensation. They'll attempt to learn why bank executives are being paid so highly when many people blame them for the economic meltdown in the first place.
At Bank of America (NYSE:BAC) , more reports are emerging that employee morale is hitting a low point. The company is currently paring 35,000 jobs throughout its division, and most people aren't sure if they're next on the chopping block.
Lewis has been busy communicating with workers about the rumors that are swirling around the company.
“It is one thing to say that in an interview. But I know that talk can be cheap. Which is why I — along with several of our directors and executive officers — have continued to purchase Bank of America (NYSE:BAC) stock over the past few weeks. I bought another 200,000 shares last week. Of course, I am not recommending nor encouraging anyone inside or outside the company to buy Bank of America (NYSE:BAC) stock. I only hope my actions speak for my confidence in our company, and in all of you,” Lewis wrote.
Lewis and insiders have been buying up stock, but it hasn't done much to restore confidence from investors or employees. This week promises to be an extremely volatile one for BAC.
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