Foreclosure-Gate: Bank of America Garners Unwanted Attention

12-03-2010 • Market-ticker.org

Auditors have never mattered since ENRON. In fact, basically all of them involved in auditing the financials of banks should be strung up by their nuts by now. How you can possibly argue that an audit opinion has merit after the disclosure of The Fed haircuts on the so-called "assets" pledged for TAF and similar programs at this point is beyond the pale. That is, we now know that banks came to these programs and pledged assets with ten times or more the face value of what they "borrowed" - but then when these loans were repaid those worthless assets (in the opinion of the NY Fed desk) were never recognized at that valuation by anyone ever again. In fact, they're probably still sitting on bank balance sheets - at 95 or even 100 cents on the dollar. This much I can tell you with certainty - whatever collateral was pledged on 1/21/2009 in the "face" amount of $185 billion for a $15 billion loan was never exposed in a 10K or 10Q as having taken a loss of more than 90%. Such a loss would have resulted in in the instantaneous detonation of Bank of America. Indeed, that loss is more than half of the firm's enterprise value as of today and exceeds the company's market cap. That is, it was more than enough to blow them to Mars - and that was one transaction.