NEW YORK (Reuters) - Bank of America Corp (BAC.N) shares fell as much as 6 percent on Tuesday morning amid fears the bank would have to raise more capital.
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Below are comments from investors, analysts, and other experts on the share decline:
MARK COFFELT, FOUNDER AND HEAD PORTFOLIO MANAGER OF AUSTIN, TEXAS-BASED MONEY MANAGER EMPIRIC ADVISORS:
“The stock’s been a dog. It’s on a self-fulfilling downward spiral. I don’t know what’s going to make BofA go up. They either have to prove unequivocally that they have enough capital in a worst-case scenario, or they have to raise capital, which will be very dilutive to existing shareholders.”
“My practice for financial stocks: when in doubt, sell. Shoot first, ask questions later. By the time you figure out what really happened, the bank could be dissolved.”
DENNIS DICK, DETROIT-BASED MARKET STRUCTURE CONSULTANT AND PROPRIETARY TRADER AT BRIGHT TRADING LLC:
“Every day it’s the same story. It keeps leading the charge down on financials and every trader is probably using that as an indicator to trade the rest of the financials too.”
“There have been rumors flying around all over, and everybody’s trying to justify a $6 price on this somehow.”
“There’s some reason it’s trading down — some people will blame high-frequency traders but I think that’s hogwash.” “I don’t think it’s a market structure problem here with Bank of America.”
NICK KALIVAS, VICE PRESIDENT OF FINANCIAL RESEARCH, MF GLOBAL RESEARCH, CHICAGO:
“It feels like a continuation of the same thing the past few days where people are concerns about its need to raise its capital and its exposure to mortgages. It casts a shadow on the entire financial sector. This puts a negative spin on the growth picture.
“I don’t feel like this is a 2008 situation. Lending collapsed in the fall of 2008. Commercial and industrial loans are still weak but they are holding up. It would be nice if Bank of America provides some clarity to what’s going on.”
GARY TOWNSEND, PRESIDENT OF MONEY MANAGER HILL-TOWNSEND CAPITAL:
“It looks like it is getting puked out.”
The problem “is a lack of resolution as to the costs of its mortgage putbacks” and settling investigations by state attorneys general and the U.S. Justice Department. “The big question is will policymakers force this to the very edge?”
DAVID DIETZE, CHIEF INVESTMENT STRATEGIST, POINT VIEW FINANCIAL SERVICES, SUMMIT, NEW JERSEY
“It does sap investor confidence to see a bank of this stature struggling so mightily.
“The key speculation right now is do they need to sell more shares of Bank of America itself to the public? This would be devastating for a couple of reasons. One is the share sale would be such a purported discount to tangible book value that it would be a terrible dilution to the existing shares. Second it would be another blow to confidence in management who have repeatedly stated that this would not be necessary.”
Reporting by Lauren LaCapra, Richard Leong, Clare Baldwin, David Henry and Jonathan Spicer; compiled by Jonathan Spicer