So why is BAC stock up so much? important, something, measures, already, charge

dkishore1

Didn't they just announce a $20 billion charge? Did people already expect this, are Greece austerity measures *really* important for BAC, or is something else going on? I'm slightly confused.

Kapie

Sell the news, buy the fact, or something like that.

OmarAdnan

i just think it was oversold. that and the 8.5bn charge was on a +400bn portfolio, which may be less than was expected.

mkytz15

BAC also announced a settlement on legacy Countrywide mortgage claims for $8.5 billion. The settlement looks like it includes all of Countrywide's first-lien MBS loans which were probably the lowest quality among the non-agency mortage loans BAC had on its books. The settlement covers over $200 billion in principal of the non-agency MBS that were originated between 2004 and 2008. Basically, investors were actually more concerned with what the potential mortgage warranty expense would have looked like as well as private label put-backs -- and this settlement, while costly, helps alleviate the two aforementioned issues which were among the greatest risk factors for investors.

(Disclaimer: I don't cover financials but this was my read-through based on some docs that I read as well as what I've heard on the trading desk)

svgleeson

numi Wrote:
-------------------------------------------------------
> BAC also announced a settlement on legacy
> Countrywide mortgage claims for $8.5 billion. The
> settlement looks like it includes all of
> Countrywide's first-lien MBS loans which were
> probably the lowest quality among the non-agency
> mortage loans BAC had on its books. The settlement
> covers over $200 billion in principal of the
> non-agency MBS that were originated between 2004
> and 2008. Basically, investors were actually more
> concerned with what the potential mortgage
> warranty expense would have looked like as well as
> private label put-backs -- and this settlement,
> while costly, helps alleviate the two
> aforementioned issues which were among the
> greatest risk factors for investors.
>
> (Disclaimer: I don't cover financials but this was
> my read-through based on some docs that I read as
> well as what I've heard on the trading desk)


This.

___________________________________________________
ChickenTikka Wrote:
-------------------------------------------------------
> Being Born Wealthy > Being Jewish or WASPY > Born
> Pretty > Top 5 MBA > CFA > Avg MBA > Born middle
> class > Born lower class > Born in crack house >
> Born middleclass in Asia and working in IT but
> looking to switch to buyside

IAmNeil

By $200 billion I actually meant $400 billion+...my bad