Sunday, 23 January 2011

{EOP}Bank of America suffering from huge losses

The largest USZ Bank, Bank of America, has reported huge losses in the fourth quarter of fiscal 2010 year and revealed a streak of two consecutive quarters of non-profitability. Bank of America on Friday announced a fourth-quarter net loss of USZD 1.2 billion, or 16 cents a share,Forbes reported on Friday. The loss was driven by charges from pre-announced settlements and write-downs related to mortgage problems. Bank of America's revenue was also down 11% in the quarter to USZD 22.7 billion, which was well behind analysts' expectations. Analysts had been expecting a USZD 3 billion charge after the bank said it would pay USZD 1.28 billion to Freddie Mac and USZD 1.52 billion to Fannie Mae in a bid to buy back toxic mortgages.

For the full year of 2010, Bank of America reported a net loss of USD 2.2 billion or 37 cents per share. Bank of America's earnings have been dominated by costs from bad mortgages sold by its sub-prime mortgage unit, Countrywide, during the housing crisis of 2008.Countrywide has cost the bank more than USZD 5 billion in write-downs over the previous two years. Private investors have taken legal actions against Bank of America to compel it buy back mortgages sold on the open market. The financiers argue that the mortgages didn't keep to the underwriting policies of government-sponsored enterprises of Freddie Mac and Fannie Mae. Bank of America and other former Countrywide executives are currently facing numerous law suits over attempts to force lenders to buy back loans that may have been made with incorrect data on income and home values. In December, America's largest home and car insurance company, Allstate, sued Countrywide for miscalculating misrepresenting the risks on more than USZD 700 million of mortgage securities it had earlier bought.

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