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Robert Trigaux

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

30

December

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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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