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KAI RYSSDAL: Ken Lewis already has one foot out the door. He announced a couple of weeks ago that he’ll be retiring at the end of the year. So the B of A news of the day isn’t really about him and working for free this year. It’s about how bad things look for Bank of America and for taxpayers.
Marketplace’s Alisa Roth reports things could be a lot worse.
Alisa Roth: B of A is the biggest retail bank in the country. And its worst problems all come from the parts of the bank that deal with regular Americans. Mortgages, consumer loans and credit cards are all losing money. On the company’s conference call this morning, Ken Lewis, the CEO, said he thinks the bank will keep losing money on those things into next year.
Matt McCormick is a banking analyst at Bahl & Gaynor. He says the bank’s problems could last even longer than that, if the problems in the wider economy keep getting worse.
Matt McCormick: If you see another shoe to drop, it will likely happen in commercial real estate and then credit cards. And certainly Bank of America has exposure to both aspects of that deteriorating aspect of the economy.
Some people think today’s could have been a lot worse though. Nancy Bush is an independent banking analyst. She says she wasn’t expecting much from the bank this quarter. And it ended up doing better than she thought it would.
Nancy Bush: I think the issue for B of A is a. getting out from under TARP, b. getting credit quality headed in the right direction in all segments and really taking advantage of their position as the nation’s number one depository institution.
Bush says it’ll be awhile before B of A can pay back all the money it borrowed from the government. And she says it could be years before it turns a profit.
Meanwhile, Wall Street can’t decide if it’s time to buy B of A stock or to sell it. McCormick, the analyst, says get out now. But his peers at Morgan Stanley and Citigroup say B of A is on the up. And now’s a great time to pick up a bargain.
In New York, I’m Alisa Roth for Marketplace.
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