Top Firm Criticized For Responding To 'Blogger'

As Goldman Sachs will tell you, sometimes it's better just to take it on the chin and keep quiet.

And perhaps Bank of America should have done that on Tuesday, when ex-Merrill Lynch internet analyst Henry Blodget pointed out on Business Insider (where is he CEO) that some folks collectively feel that the bank may have underestimated provisions / overestimated assets by between $100bn - $200bn.

Now the people over at BofA are clearly under a bit of pressure (wouldn't you be when your stock price is tanking ?), but instead of ignoring the post, an official bank spokesperson responded with the following:

'Mr Blodget is making 'exaggerated and unwarranted claims', which is what the SEC stated publicly when he was permanently banned from the securities industry in 2003 (Ed's comment - 'Oh...that's a bit below the belt').

The sovereign exposure (Blodget quotes in his post) is off by a factor of ten. The commercial real estate figures are off by a factor of four. The mortgage analysis was provided by a hedge fund that has acknowledged it will benefit if our stock price declines.

The recommendations on goodwill accounting would be prohibited by generally acceptable accounting practices. Traditional bank valuation relies upon tangible book value per share, which excludes by definition 100 percent of goodwill and other intangibles.

As of June 30, our tangible book value per share was $12.65'.

Yep, sometimes silence is golden. Because, in an effort to discredit the post, BofA has only drawn more attention to it.

And, for those interested, here's Blodget's original post:

Here's Why Bank Of America's Stock Is Collapsing Again

 

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