Bank of America Posts Loss for Year By ANDREW MARTIN and DAVID JOLLY Published: January 20, 2010 Cash-strapped consumers continued to rain on Wall Street’s victory parade on Wednesday. Even as the nation’s largest financial institutions report whopping profits from their investment banking units, those with major consumer lending portfolios continue to bleed money as unemployment and a weak housing market hamper people’s ability to repay their debts.
In the separation of commercial from investment banks, the wheat has been separated from the chaff. Those at Goldman Sachs are up to their eyeballs in Wheaties and you and I, who may have accounts at BofA, are coming up chaffed (if not severely chafed). To be chafed is to ‘feel extreme irritation or anger’ rather than mildly satisfied with an 8-figure bonus.
. . . those losses posed a fresh threat to Bank of America, which reported a fourth-quarter net loss of $5.2 billion. . .
That’s a loss for a single quarter. Five thousand million lost. $77 million lost every working day. In that same number of days, countless jobs were lost and homes foreclosed upon. The actual percentage of Americans out of work is far closer to 22-23% than the 10% our government declares, as if it were manageable. Not to worry, if you’ve been out of work a year or more. That doesn’t count. The only counted jobless are those who haven’t yet run out of unemployment compensation.
. . . said it suffered a loss of $4.9 billion on its consumer credit card business, compared with a $3.3 billion loss a year earlier. Total write-downs for the year totaled $33.7 billion, more than double the $16.2 billion in 2008. . .
Double a year ago, the worst year since 1933.
. . . Bank of America is “encouraged by signs the economy is improving, as we have seen in the stabilization of our credit costs, particularly in the consumer businesses”. . .
“What was that bump, Captain?” “Not to worry, the Titanic is unsinkable.”
. . . Most major retail banks are facing the same problem: Citigroup said Tuesday that the $1.6 billion in losses it suffered in 2009 losses came in part from losses in the bank’s mortgage and credit card units, which overwhelmed gains from investment banking — a trend that is likely to continue. Last week, JPMorgan Chase said its consumer businesses, and particularly its credit card unit, were hemorrhaging money. . .
There is, I suspect, a difference between hemorrhage and taking on more water than the bilge-pumps can handle. One is pouring out and the other pouring in. Either way can be fatal.