Chris Whalen - 'It's Time For Bankruptcy, Bank Of America Is Doomed'

Whalen says, the government should just seize Bank of America and restructure its debt, equity, and legal obligations now.

Most recent clip from independent banking analyst Chris Whalen, recorded last week.

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Source - Tech Ticker

Bank of America is doomed, says bank analyst Chris Whalen, the founder and managing director of Institutional Risk Analytics.

Importantly, this dour outlook as nothing to do with the company's operating businesses, which Whalen thinks are fine. In fact, says Whalen, there's no need for the bank to be restructuring them and firing thousands of employees to improve its bottom line.

The part of Bank of America that's not fine, in Whalen's view, is the ongoing liability from the mortgage underwriting that Bank of America's subsidiaries did during the housing bubble. The litigation exposure from this could be so humongous, Whalen argues, that it will bankrupt the company, forcing regulators to step in and restructure it.

And Whalen doesn't think the country should wait for that day.

Instead, Whalen says, the government should just seize Bank of America and restructure its debt, equity, and legal obligations now. The company's operating businesses--branches, commercial lending, wealth management, and so forth--should continue operating, and the company could then be refloated with a new ownership structure.

This would leave Bank of America clean, lean, and competitive--just like the strengthened GM after the forced auto-company bankruptcy.

But in the meantime, none of this is under discussion. Instead, says Whalen, Bank of America is rearranging chairs on the deck of the Titanic. And firing thousands of people who don't need to be fired.

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Related stories:

• Chris Whalen Recommends Chapter 11 Bankruptcy For Bank Of America: Default And Liquidation Under Dodd-Frank

• Chris Whalen: Is Social Security A Ponzi Scheme?

Comments

[DailyBail]

Just look at the recent experience of Bank of America, which announced layoffs for 30,000 employees on top of thousands already laid off in the previous few years. It was the brass ring of former CEO Ken Lewis to make Bank of America the dominant player in financial services. But as happens so often, the growth went a step too far – and now CEO Brian Moynihan’s job, in essence, is to scale back and clean up the mess.

http://www.washingtonpost.com/national/on-leadership/bank-of-america-and-those-tantalzing-words-grow-baby-grow/2011/09/19/gIQAJGRdfK_story.html

[TR]

Fannie Mae will save BOA. NEVER ENDING BS

http://www.mybudget360.com/banking-gears-of-housing-bank-of-america-sells-mortgage-servicing-rights-on-large-loan-pool-to-fannie-mae/#more-3404

[Paul]

has Countrywide sunk Bank Of America?

either way this is what should have happened from the beginning of the collapse for all of them.

they knew it was this big. they chose not to act appropriately on behalf the public.

[S. Gompers]

The important thing is that the taxpayer made their bonuses whole two years ago... Fat man is always dancing, while the poor man pays the band.

[mikael]

What they hate to admitt is the fact that shutting down like that actualy works. Scandinavian country did do just that a cuple of decades ago, we had a housing boble.
If not restructured the bank, the dept will just rise and the bank becomes increasingly more expecive to runn and in the end all the customers will be afected, thats the name of that game.

Cutt it now, and save jobs and lives, restructure the mortages and make sure the wast majorety is capable to stay in their respective houses. If they can do just that, the can aford to use lokal chraftsmenn and the cash flow in a comunety will rise and that will benefitt us all, not like to day the Oligarcs in Wall Street.

[robertsgt40]

I expect BoA will do the bankster two-step. Just shift all their garbage mortgages to Fannie and Freddie and let the taxpayer take the hit. Then when F and F are sitting on a couple million bellyup mortgages, they will have a fire sale and sell them back to friends of BoA and others. Wash/rinse/repeat cycle

[epiphany]

This is all just so terribly sad. Not just for B of A, I don't feel for them at all, but for everyone. The taxpayers should not be bailing anyone out, but bankruptcy is a viable option for B of A. I'm tired of this economy!

ep