TigerSoft Freedom News Service    1/21/2009     www.tigersoft.com     Stock Market Predictions

Bank of America's Insolvency Threatens Global Markets

    TigerSoft Still Shows Unrelenting Insider Selling
                         Institutional Dumping Is Intensifying.


                    What Will Obama Do?  More Bailout Billions?
                           Study The Problem?  Nationalize?

             Nouriel Roubini (Dr. Doom) versus Sheila Blair (FDIC)

                                                  See also - BANKS ROB PAULSON's US TREASURY

                                                 by William Schmidt, Ph.D. -  Creator of Tiger Software.

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               BAC, The Bank That Stank And Sank The Whole Market

                       What will the market do if the US Government must nationalize (buy out a majority
                 of the stock in) BAC?   Socialism for the non-rich scares Wall Street to its core.   But
                 what will the market do if the Government just allows BAC to go out of business? 
                 Also very bad.    Today the DJI dropped below 8000.  Perhaps, it will recover from 7500
                 like it did 7 weeks ago.  But what if
it does not?  There's very little support below 7500
                 until the DJI is down to 6000.  Obama may wish he had lost the Election!

                        Bank of America (BAC) has an estimated 24.6 million on-line customers.   The
                 next biggest bank, measured this way, is Chase/Morgan/Wamu with 21.4 million.
                 Wells Fargo/Wachovia with 17 million is next.    Only the government can save
                 BAC.     No other entity is big enough.

                       As losses mount at CitiGroup and Bank of America, it becomes more and
                 more mathematically impossible to inject enough capital into these banks without
                 taking a majority stake.  Obama has said he wants the banks to not pay dividends
                 and give executives big bonuses.  He has said he wants the banks to start making
                 loans with the money they are given.  For the Government simply to buy all
                 the worthless and defaulting mortgages does not hold the banks accountable
                 for their misguided, bad loans.   It will be a lot easier to accomplish these goals
                 if the government runs these banks directly.  At least, then it will start to understand
                 the ways banks have concealed their worthless loans and wasted millions on
                 executive perks.  Ownership bestows managerial control.  That is the only way
                 way the government can start taking steps to advance credit again, something
                 which the biggest banks are unwilling to do and can get the banks to stop paying
                 unworthy executives ridiculous and wasteful sums for imprudent decisions.

                                                      The Stock Market and The Economy
                                 Must Not Be Dependent on Banks Like BAC and CitGroup

                        Bank of America's stock has led the US Stock market down.  It's price
                 breakdown last May began the long 2008-2009 slide in equities in the US and
                 around the world.  The company is too big to have this power.  And it is too
                 badly run to be allowed to exist under its present management.  Its CEO
                 has almost single-handedly destroyed a company that had previously withstood the
                 the turmoil of the 1970s, the Crash of 1987, the Bush bear market of 2001-2003...

                        Insiders at BAC have been dumping the stock since early 2007.  They still are.
                 Should Obama bail out a bank whose stock is being heavily sold by its own
                 Board of Directors?   BAC, as presently run, is a public menace.  Its overpaid
                 CEO, Ken Lewis, has made one terrible decision after another.  BAC now poses a clear
                 and present danger to the global market and certainly the US economy.  What will
                 Obama do about its impending insolvency?   

News - 1/21/2008  - BAC Board fo Directors heard this criticism.  Today it is
                 reported that they bought 200,000 shares.  We will report the facts here as
                 they emerge.  That's a start!   But just one director, John Thain, sold 93,374
                  on 1/9/2009 for 13.56.   Thain has just resigned in scandal form BAC.   He spent
                more than a million in the last month decorating his Merrill Lynch office and
                quickly dishing out millions in bonuses (for what?) in the days right before
                BAC took over.   Conveniently,  BAC's CEO, Ken Lewis, looked the other way,
                making American taxpayers pick up the tab.  Lewis clearly worked  in connivance
                with John Thain!  Sources: (1)   (2)
                      Bank of America will be the first test for the new Obama administration.  Waffling
                 and lofty words will not solve the problem it poses.


                                                    BAC and DJIA - 2007-2008wpe147.jpg (47285 bytes)


                               BAC closed at 5.10 today, down 2.08 and 29% in just one day!

                 wpe115.jpg (20591 bytes)

                  wpe115.jpg (6888 bytes)         "Effectively Insolvent"

                             NYU Professor, Nouriel Roubini, said today that "
I’ve found that credit losses
                 could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers..
                 If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital
                 of $1.4 trillion. This is a systemic banking crisis.”  At least another trillion dollars more in public
                 funds will be needed to shore up the banks."  (Source.)   Roubini has had a remarkably
                 accurate crystal ball since late 2006 when he warned the IMF that a financial meltdown
                 would follow the burting of the housing bubble.

                 wpe140.jpg (2788 bytes)    FDIC's  Sheila Blair's Rejects Robini's Fears. 

                     "Banks have some real challenges," Bair said during a CNBC interview. "But I think it needs
                  to be emphasized and re-emphasized these banks are solvent, they're well-capitalized overwhelmingly,
                  and that really is what creditors and depositors seem to be focusing on right now."   Though she did
                  acknowledge problems. She said 98 percent of all banks are well-capitalized, representing 99 percent
                  of all assets.   My sense is that she has a static view.  She is assuming that
                 housing turns around immediately and does not keep falling.  Unfortunately,
                 housing prices are still falling and confidence is still worsening.  That will
                 make the "troubled assets", i.e. bad mortgage loans increase and worsen.


                                           Home Builder Sentiment Continues to Erode

The National Association of Home Builders said its preliminary NAHB/Wells Fargo Housing
                 Market Index was 8 in January, down from 9 in December. That is the lowest level on record since
                 the gauge was launched in January 1985.   Readings below 50 indicate more builders view market
                 conditions as poor than favorable. The January index was below expectations of 9, based on a
                Reuters survey of economists... "  See also - http://www.iasreo.com/ias360update.html
                Google your community and housing prices.  Here is what I found for San Diego.
                Home prices down 26.7% from year ago


                                    A TARP BY ANY NAME IS STILL A BANK BAILOUT!

                       Blair is a proponent of the idea wherein a US government Aggregate Bank would
                 "buy the (delinquent or foreclosed mortgage, which - my question)) assets at fair value. Some are
                  concerned that you’d have to mark the assets down to purchase them, but I think it could help
                  provide some rational pricing, actually, for the market in some of these assets because we don’t have
                  really any rational pricing right now for some of these asset categories...

                      "The idea would be to set up a facility, it could be structured as a bank, to capitalize it with
                   some portion of the TARP funds. Financial institutions that wanted to sell assets into the bank
                   could also perhaps take part of their payment as an equity interest in the aggregator bank to
                   provide an additional cushion. If you sold $1 of assets into the bank, you would get 80 cents in
                   cash and you would get 20 cents in an equity interest in the bank. So that would be an additional
                   cushion against loss."    (Source)  

                             My reaction to this idea is very negative.  It takes banks off the hook for
                 their bad decisions.  It lets them sell their worst loans to the taxpayer.  Many
                 of these mortgage loans are worthless.  Why is no one looking at how other
                 countries have dealt with bad banks?  Because nationalziation smacks of
                 socialism for the non-rich!  A national bank, like Andrew Jackson wanted,
                 would make loans now and not pay ridiculously high salaries to the arrogant
                 idiots who got us in this mess!
                                    The Massive Insider Selling Suggests Roubini Is Correct

                             Nothing in the TigerSoft charts of Bank America show a bottom now,
                 unless you believe that trading volume has risen to panic levels and the new Obama
                 Administration will protect it with $80 billion more in taxpayer handouts.  That's
                 probably what it will take to bring its cash levels up to the levels needed to
                 permit it to keep operating as a bank.

                             Will Obama see that Bank of America is too big?  It now has 243,000
                 employees.   Its vastly over-paid executives have a long history of truly
                 terrible decisions, from "zero-down" home loans for anyone willing to lie about
                 their incomes, to buying mortgage-giant Country Wide exactly at the worst possible
                 time and then buying Merrill Lynch also at the worst possible time.  Its executives
                 are not prudent bankers.  They are reckless gamblers, rolling dice with shareholders'
                 and now tax-payers' money.  

                             Can BAC's CEO be trusted?  Paulson thought he had a deal and that
                 US banks would start lending the $300 billion the Government gave them last year. 
                 They did not.    Recently, BAC bought out Merrill Lynch.  BAC's CEO Ken Lewis
knew of (Merrill's) massive losses before the deal closed and declined to
                                inform Bank of America shareholders. Merrill recorded an operating loss of $21.5 billion
                                in the Q4 2008, requiring an additional $20 billion cash infusion from the U.S. government,
                               bringing the government's total investment to $45 billion." 
                 Clearly BAC's CEO did not dilligently examine Merrill's books in the weekend of Sept.
                 13-14, 2008 when the BAC-MER deal was made or in the following 3 months before
                  BAC shareholders voted to accept Lewis's deal on December 5.  (Source.)  

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                            Leadership like Ken Lewis has shown is dangerously reckless.  But BAC's
                 Board of Directors fawn all over him and paid him about $43 million in 2006 and 2007.
                 An honorable man would resign.  He may be certifiable.  Insiders close to BAC's
                 bossman write:  "
Senior management is arrogant. Ken Lewis runs this place as if it were his personal
                 empire instead of a shareholder-owned company that is successful because of its employees and not his
                 "leadership". Many of us own stock in the company, and his personal hunger for Merrill-Lynch caused him
                 to pay far too much for it. That has hurt our stock...Ken Lewis should resign...More often than not, people
                 get to those positions more through the "good ole boy" method than by talent and hard work. There are a
                 lot of people out there who could do Ken Lewis' job for far less money and do it more effectively".  (Source.)

                           Ken Lewis, of course, is not the only CEO in America who runs his company
                 like a medeival fiefdoms, where the king owns everything and everybody and can
                 do no wrong.  His predecessor at Country Wide. Angelo Mozilo took $470 million in
                 "compensation" from that company while ruining it. 
"His compensation also includes payment
                 of his annual country club dues at Sherwood Country Club in Thousand Oaks, CA, The Quarry at La Quinta
                 golf club in La Quinta, CA and Robert Trent Jones Golf Club in Gainesville, VA... Shortly after (the)
                 University of San Diego (a private Catholic school) invited Mozilo to be the keynote speaker at a conference
                 for "a sustainable real estate"   DisinviteMozilo.com was created in protest on January 10, 2008. Mozilo pulled
                 out six days later. Shortly after that, Congress invited Mozilo to (justify)... his compensation....Over many years,
                 Mozilo sold hundreds of millions of dollars in stock personally, even while publicly touting the stock and
                 using shareholder funds to buy back stock to support the share price."

                   wpe142.jpg (3303 bytes)                 UNBRIDLED GREED AT BAC

                         Despite BAC's getting $25 billion in taxpayer bailout,  Bank of America would
                not lend Republic Windows and Doors the money it need to continue.  That caused
                the Chicago company to halt operations and terminate its 250 workers with only
                three days.  That spawned a successful workers' in Chicago, a lot of bad publicity
                and even Obama intruded on the side of the workers.  BAC eventually relented.

                ( Source. )
                          "Over the past couple of months I missed a couple of payments on my Bank of America card.
                I was out of town for some of the time and just forgot to make a payment. They put my interest rate at
                10 times what it had been before. I pointed out that I had sent them 600.00 all of my fees and penalties
                but informed them that i would not be able to pay the higher interest rate which is now 30%. They refused
                and closed my credit card hurting my credit but keeping the new 30% interest fee intact. Bank of America
                has little mercy or patience for their customers and they are burying people like me and at the same time
                getting massive government welfare. Obviously Bank of America is a dark enterprise whose ambition
                for money and power has created a significant negative influence on the lives hundreds of thousands
                of people. I do not know what can be done about them But I do wish that something is done change
                this company into something much worthy of its name. "
                     ( http://baselinescenario.com/2009/01/16/bank-of-america-gets-quite-a-deal/ _

                 wpe140.jpg (2450 bytes)     Obama's Speech at his inauguration gave few clues what he will do.

Our economy is badly weakened, a consequence of greed and irresponsibility on the part of
                              some, but also our collective failure to make hard choices and prepare the nation for a new age.
                              Homes have been lost; jobs shed; businesses shuttered."

                                              HEAVY INSIDER SELLING AT BAC CONTINUES

                               The Yahoo table below shows that official insiders at BAC sold 4.5 times
                  more shares than they bought in the last six months, despite the much lower
                  stock prices.  TigerSoft charts show that their friends at institutions continue to sell
                  heavily.   This raises a question of confidence.  Why should the taxpayer bailout
                  a company run by executives who themseves show no confidence?

Insider Purchases - Last 6 Months
Shares Trans
Purchases 6,728 3
Sales 31,629 2
Net Shares Purchased
(24,901) 5
Total Insider Shares Held 28.05M N/A
% Net Shares Purchased
(0.1%) N/A

                                                          ( http://finance.yahoo.com/q/it?s=BAC )

                          Traders are betting there will be no bailout for Bank of America to save shareholders.
                    BAC remains on a TigerSoft  Sell.  These automatic trading signals have been nearly
                    perfect except when a Buy arrow flashes right after the price breakdowns April and
                    and November.  (In this technical situation, we have long advised not using the
                    Buy arrows.

                          The Blue TigerSoft Closing Power is declining steeply.  The magenta OBV Line has
                    bearishly made a confirming new lows.  The green relative strength line is also
                    confirming the new lows.  The COP indicators is in bearish red territory and its
                    black ma is in a free fall.

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                                        A History of Bank of America's Stock

                         wpe148.jpg (22716 bytes)

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                                                                              2007wpe14C.jpg (67331 bytes)wpe14D.jpg (25779 bytes)                   
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