Bank Stocks Drop on Escalating Mortgage-Cost Concerns

Discussion in 'Wall St. News' started by ASusilovic, Oct 14, 2010.

  1. Oct. 14 (Bloomberg) -- Bank of America Corp., Citigroup Inc. and H&R Block Inc. plunged, leading a drop in financial stocks, on escalating concerns that faulty handling of home loans and foreclosures will fuel costs.

    H&R Block dropped $1.23, or 9 percent, to $12.46 at 2:22 p.m. in New York, the third-biggest decline among stocks in the S&P 500 Index. Bank of America slid 5.8 percent, Wells Fargo & Co. dropped 4.8 percent, and Citigroup dropped 5.5 percent. Charlotte, North Carolina-based Bank of America and New York- based JPMorgan Chase & Co., which fell 4.1 percent, were today’s worst performers in the 30-member Dow Jones Industrial Average.

    “You have a new cloud forming on the horizon which could be anything from something minor to something that really slows down the process” of foreclosures, said Benjamin Wallace, an analyst at Grimes & Co. in Westborough, Massachusetts, which manages about $900 million and owns stock in JPMorgan and Wells Fargo. “There was some certainty coming back but this mortgage stuff has just reversed that.”

    The declines reflect uncertainty about costs that banks might bear on so-called mortgage put-backs from investors or insurers who challenge the loans as well as uncertainty about the potential costs of legal challenges to foreclosures, analysts said. Bank of America Chief Executive Officer Brian T. Moynihan, speaking at a conference in Boston, said the market’s volatility is unprecedented.

    ‘Nothing Different’

    “There’s nothing different about our company today than yesterday,” he said. “I’m not sure it is justified.”

    The Association of Financial Guaranty Insurers, a trade group for bond insurers, said in a letter last month to Moynihan that his bank should repurchase as much as $20 billion in home loans that were based on wrong or missing information. MBIA Inc., the world’s biggest bond insurer, rose as much as 16 percent to $12.95, the highest level in more than two years, after climbing 4.6 percent yesterday. Ambac Financial Group Inc. jumped as much 21 percent today, and Assured Guaranty Ltd. rose as much as 8.7 percent.

    :D :) :p :D
  2. S2007S


    No need to worry as banks will get more money towards this problem to fix it, if they need billions of dollars they will get billions of dollars, they wont let the banks suffer from the consequences they created, that wouldn't be fair, now would it?