Bank of America (BAC)

Bank of America is paying an absurd fee, about 25 times after-tax earnings, to acquire U.S. Trust from Charles Schwab (SCHW), a money manager for ultrahigh-net-worth individuals that will help Bank of America expand its small Global Wealth and Investment Management segment.

1. 4 = My dad had a saying, "The same things, the very same things that make you laugh can also make you cry." On reading the bulls here, i was reminded how true that can be. Happy stuff includes: BAC holds 10% of all savings in the USA; BAC is big in Texas, Florida, and California.

Now for crying time. As economic conditions worsen- and they almost certainly will- the drawdown on those savings held by BAC will increase dramatically as necessity requires foreclosure avoidance, increased living costs due to inflation, and other needs. And where are they big again? The very states with some of the worst foreclosure problems in the nation- Florida, California, and Texas.

Bank of America is paying an absurd fee, about 25 times after-tax earnings, to acquire U.S. Trust from Charles Schwab (SCHW), a money manager for ultrahigh-net-worth individuals that will help Bank of America expand its small Global Wealth and Investment Management segment.

1. 4 = My dad had a saying, "The same things, the very same things that make you laugh can also make you cry." On reading the bulls here, i was reminded how true that can be. Happy stuff includes: BAC holds 10% of all savings in the USA; BAC is big in Texas, Florida, and California.

Now for crying time. As economic conditions worsen- and they almost certainly will- the drawdown on those savings held by BAC will increase dramatically as necessity requires foreclosure avoidance, increased living costs due to inflation, and other needs. And where are they big again? The very states with some of the worst foreclosure problems in the nation- Florida, California, and Texas.

With nearly 10% of the nation's deposits, Bank of America has bumped up against the legislated limit, leaving little room for growth in its highest performing division: Global Consumer and Small Business Banking.

Bank of America bought Countrywide Financial (CFC) earlier this year and therefore has to deal with problems in the housing and credit markets. They spent $2 Billion on buying preferred shares of CFC. On the positive side, the deal came with preferred shares and a 7.25% coupon- nice work if you can get it. And, as preferred shareholders, BAC gets to belly up to the bar first if CFC goes BK, in which case it's widely presumed they'd grab off the lucrative CFC servicing arm.

Well, already those preferred shares have lost nearly half their original value, and most traders expect CFC to get a lot worse before it goes bankrupt. And the servicing arm? It's robust, but now threatened by the latest Treasury mortgage rescue initiative, the so-called "teaser freezer" that would (if CFC voluntarily agrees to it) freeze mortgage rate resets for a few years, a move that would put a substantial dent in the CFC servicing arm's profitability.

Furthermore, the credit markets are going to continue to see problems for a variety of reasons. Consumers are highly leveraged due to all the easy money that was lent out the last time interest rates dropped to very low levels so I don’t think the current drop in interest rates is going to help out much. At the same time, the prices of commodities are being driven higher and higher by speculators, which will do a lot of damage to consumers. Rising food prices and gasoline prices are definitely going to have an impact on overleveraged consumers’ ability to pay bills.

A number of houses are for sales and with rising foreclosures, this trend is definitely is set to rise.

The New York Times weekend edition has a damming story of Countrywide's arrogance and distain. these stories are front page news and in the fronto of mind of investors. At a time of Indymac Fanny Mae melt downs investors won't committ to B of A.

Countrywide, which administers $1.48 trillion of loans across the United States, finds itself at the center of the foreclosure mess. As of the most recent quarter, 2.67 percent of the loans that Countrywide services were more than 90 days delinquent. (The Bank of America Corporation acquired Countrywide on July 1 and is now overseeing the Countrywide portfolio.)

Lenders and servicers like Countrywide are inundated with requests for help from borrowers who cannot afford their loans. Alas, these companies’ operations weren’t set up for such work; servicing units were originally intended to collect monthly checks from borrowers and then disburse the payments to mortgage holders. During the boom years, there was little need to advise borrowers or restructure loans