Bloomberg reports that a cut in reserves for bad loans helped the Charlotte, North Carolina-based company swing to a $2.46bn profit from a record $8.83bn loss a year earlier as the bank reported today that fewer borrowers fell behind on payments. At the same time, the bank said demands for buybacks from mortgage-bond investors and insurers surged more than $6bn in three months to $22.7bn.
'We don’t think this is done', said Paul Miller, an analyst at FBR Capital Markets and a former Federal Reserve Bank of Philadelphia examiner with a hold rating on Bank of America. 'Can they defend themselves and pay only a fraction of that', Miller asked, or will claims 'continue to come in and just overwhelm the company ?
Analysts repeatedly questioned top managers including CEO Brian T. Moynihan during a conference call today about the demands, including the extent of future losses and why claims continue to rise on loans made as long as six years ago during the housing bubble. Moynihan, 52, has already committed more than $40bn to resolve disputes on faulty loans and foreclosures.
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