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Bank of America Passive Aggresive Accounting

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Bank of America (NYSE:BAC) issued a convoluted press release announcing a restatement covering eight quarters. Management is quick to point out it’s all non cash so relax and have a latte. The restatement has been reported to the FDIC and Comptroller of Currency so they can claim regulatory compliance.

I have read the press release several times. Investors cannot find this to be transparent or useful. Management is relying on the subliminal message that it is a non cash issue, so just go back to sleep. It’s all good?  The reality is components of Bank of America’s credit card operations are worth less than originally reported. Never good news in the financial and investment world.

Management maintains that they have been consistently testing goodwill values. The earlier tests during 2009 and first half of 2010 did not indicate impairment. But in Feb 2011 the same tests now indicate impairment. {insert comments about rear view mirror here}

So what are the changes and why are they necessary” Read this confusing non informational quote and join the skeptics camp.

“The restatement, which resulted from changes to processes covering legal entities implemented in 2010, covers eight quarterly periods of 2009 and 2010,….

The goodwill write-down was caused by deteriorating credit quality and the adverse impact from The CARD Act on Bank of America’s credit card operations in 2009…..

Bank of America periodically conducts a test of the carrying value of the goodwill assigned to each of its business segments, including Global Card Services. Through 2009 and the first half of 2010, the test indicated no goodwill impairment in that segment.”

The press release does not quote any senior officers. A sure sign the big wigs are looking for cover. The reality is a lot of the card operations lost money because of poor credit decisions. Bank of America is opportunistically pointing a finger at Dodd-Frank financial reform legislation. What about the core fundamental fact that poor credit decisions were made which eventually forced impairment charges?

Disclosure: “George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

2 thoughts on “Bank of America Passive Aggresive Accounting

  1. Pingback: Bank of America Passive Aggresive Accounting « FinancialSkeptic's Blog | Accounting world news

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