Tuesday, February 22, 2011

BAC Shares Take Beating: New $20B Writedown, Now On Credit Cards

Another sign that not all is good in the U.S. What's a billion these days... BAC, practically doubled a goodwill impairment for its credit-card unit to $20.3B due to increased defaults..

The bank restated its federal regulatory filings to record the writedown. Says Bloomberg: "The non-cash charge, which replaced a $10.4 billion impairment booked on the unit last year, doesn’t affect “the financial results, safety and soundness or the capital position” of the Charlotte, North Carolina-based parent company, said Robert Stickler, a spokesman".

"The writedown shows the credit-card unit’s prospects may have deteriorated more than initially disclosed after the U.S. passed legislation, known as the Card Act, in May 2009 to curb fees and interest-rate increases. In November, the bank said some measures would cut annual revenue by $1 billion, undermining efforts by Chief Executive Officer Brian T. Moynihan, 51, to improve returns for investors. The firm yesterday said the act and “deteriorating credit quality” caused the revision".

The restatement, covering the eight quarters of 2009 and 2010, was made in reports filed with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., Bank of America said".

The bank's shares took a beating today, along with other financials:

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