“In a comment out today, Dick Bove predicts huge losses ahead for Bank of America:
It is now believed that BAC will lose an additional $32B in the next three years related to the housing crisis. Approximately, $9B of this money will be derived from its reserve. The remaining $23B will be charged to earnings at the rate of $2B per quarter for the next three years. It is likely that the bank will sell additional assets to soften the impact on capital. To determine BAC’s exposure to the housing market five sectors were isolated: the securities portfolio, trusts serviced by the bank, the loan portfolio, reps and warranties, and the bank’s servicing portfolio. The losses were then estimated based on the bank’s recent experience. The biggest risk in the securities portfolio appears to come from the government backed securities.
All that being said, he thinks it’s all priced in…..”
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