Bank of America pre earnings aftermath has already left a mark whose deepening impression threatens several aspects of the larger economy. By the time the bank reports in the morning many of it's assets will have been crushed under the burgeoning weight of the credit crisis.
Lehman Brothers analyst Jason Goldberg wrote in a client note it will be tough for Bank of America to meet expectations for the quarter. The bank's books are vulnerable to $18 billion in leveraged loans, $15.7 billion in commercial mortgage-backed securities, and $8.2 billion in subprime collateralized-debt obligations.
The bank's response has been to tighten up on credit itself, and as other banks join ranks the shots will be heard around the global economy. to begin Bank of America was one of several to abandon making private student loans.
Bank of America on late Thursday said it would exit the private student loan business, but continue to make loans backed by a federal loan program for students.
The next causality is Sears Holdings Corp.
Sears Holdings Corp. which operatesKmart and Sears stores, said in a filing with the Securities and Exchange Commission on Friday that Bank of America will not renew its $1 billion long-term credit amendment under its existing terms.
And not to be understated is that Bank of America's acquisition price of Countrywide Financial Corp. is also threatened by credit problems at the mortgage lender.
...weak credit trends could endanger the final sale price.
Countrywide is likely to report rising defaults among its option ARM portfolio, as well as other mortgage product holdings
The bank's bogus assets are being written down as global ponzi scheme is seizing up.
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