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Robert Trigaux

After year of mega-stumbles, Bank of America on track to be the 2011 Dud of the Dow




Wake up and good morning. Let's add one more indignation to the relentless lumps (like here, here and here) that Bank of America has sustained as clearly a too-big bank that does not have a good grasp on its businesses... and certainly not on its customer relations.

The North Carolina banking behemoth, a giant in the Florida market, also happens to be on track to be this year’s worst performer in the Dow Jones Industrial Average as concern about mounting mortgage losses and a global economic slowdown weigh on the second-biggest U.S. lender.So says Bloomberg News in this report.

"The 59 percent decline through (Wednesday) erased almost $80 billion of shareholder value at Charlotte, North Carolina- based Bank of America. It’s the firm’s largest drop since a 66 percent plunge in 2008, when a U.S. bailout staved off a collapse. The bank probably will also end 2011 last in the Standard & Poor’s 500 Financials Index and the KBW Bank Index," Bloomberg reports. BofA's share price hovers just above $5 lately.

Here's the best quote in the story. “What you have is like a three-ring circus, and in all the rings for Bank of America, the show isn’t any good,” Greg Donaldson, chairman of Evansville, Indiana-based Donaldson Capital Management LLC, told Bloomberg. Donaldson oversees $500 million, including Bank of America shares. He cited new regulations, mounting costs of bad loans and a lack of confidence in management. "You just got one surprise after another this year," Donaldson said.

Other stories like this week's report from Lutz-based bank analyst Dick Bove of Rochdale Securities -- saying BofA employees are "massively overpaid" -- hardly help the bank's image. (Bove says Bank of America employees earned a whopping 38 times what the company itself earned before taxes in 2011.)

Let me repeat the question I asked in this August 2011 column: We know Bank of America is TBTF  -- Too Big To Fail. But is it also Too Big To Function?

As Donaldson told Bloomberg News: "The market has given up on (BofA CEO Brian) Moynihan, given up on their story."

Let's hope that's not the case or it will be a very long 2012 for a very large bank.

-- Robert Trigaux, Business Columnist, St. Petersburg Times, which this Sunday (Jan. 1, 2012) becomes known as the Tampa Bay Times


[Last modified: Friday, December 30, 2011 8:29am]


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