Comments on: The BofA tail-risk discount http://blogs.reuters.com/felix-salmon/2010/10/19/the-bofa-tail-risk-discount/ A slice of lime in the soda Sat, 25 May 2013 16:48:33 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: test1020 http://blogs.reuters.com/felix-salmon/2010/10/19/the-bofa-tail-risk-discount/comment-page-1/#comment-19727 test1020 Wed, 20 Oct 2010 03:47:57 +0000 http://blogs.reuters.com/felix-salmon/?p=5879#comment-19727 goog goog

]]> By: TFF http://blogs.reuters.com/felix-salmon/2010/10/19/the-bofa-tail-risk-discount/comment-page-1/#comment-19716 TFF Tue, 19 Oct 2010 17:22:06 +0000 http://blogs.reuters.com/felix-salmon/?p=5879#comment-19716 Losing $7B in a quarter *beats* expectations? In the midst of a "recovery"? Wow, that is REALLY setting the bar low! My preference is for businesses that turn a profit, not those that post massive losses in the midst of the widest spread we've seen in a decade between short- and long-term rates. What happens to their book if inflation (and short-term interest rates) picks up? What happens to their book if inflation *doesn't* pick up and we hit a spell of deflation (along with another round of defaults)? But I guess we might hope for the best -- continued losses for a few years as their consumer business stagnates under regulatory pressure. Just really hard to put a high price to that "best case" scenario. Losing $7B in a quarter *beats* expectations? In the midst of a “recovery”? Wow, that is REALLY setting the bar low!

My preference is for businesses that turn a profit, not those that post massive losses in the midst of the widest spread we’ve seen in a decade between short- and long-term rates. What happens to their book if inflation (and short-term interest rates) picks up? What happens to their book if inflation *doesn’t* pick up and we hit a spell of deflation (along with another round of defaults)?

But I guess we might hope for the best — continued losses for a few years as their consumer business stagnates under regulatory pressure.

Just really hard to put a high price to that “best case” scenario.

]]> By: dolanecon http://blogs.reuters.com/felix-salmon/2010/10/19/the-bofa-tail-risk-discount/comment-page-1/#comment-19714 dolanecon Tue, 19 Oct 2010 17:19:07 +0000 http://blogs.reuters.com/felix-salmon/?p=5879#comment-19714 So that is how it is, is it? BoA, because it is too big to fail, has to bear extra regulatory burden that pushes its stock price down. After reading so many times that TBTF banks have a competitive advantage, with counterparties eager to lend to them at discounted rates, this news of BoA's pain almost makes me cry. Disclosure: I am a depositor, although not a stockholder, of BoA So that is how it is, is it? BoA, because it is too big to fail, has to bear extra regulatory burden that pushes its stock price down. After reading so many times that TBTF banks have a competitive advantage, with counterparties eager to lend to them at discounted rates, this news of BoA’s pain almost makes me cry.

Disclosure: I am a depositor, although not a stockholder, of BoA

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