Bank of America Says Henry Blodgett Is Making Exaggerated & Unwarranted claims

Aug 23, 2011
J. Webster
Comments Off on Bank of America Says Henry Blodgett Is Making Exaggerated & Unwarranted claims

Now it’s starting to get interesting. And it’s about time Bank of America started to stand up for themselves if there’s any reason to stand up for it. If they don’t, everyone is just going to keep piling on and hammering the stock like they did in 2008. The shorts are happy to spread fear and make the stock go lower if BAC doesn’t do something to stem the tide.

And attacking Henry Blodgett is pretty funny, especially given his past history. I’m guessing he was an easy target. But it’s nice to finally get something from BAC.

Statement from Larry DiRita, a Bank of America spokesman.

Mr. Blodgett is making “exaggerated and unwarranted claims” which is what the SEC stated publicly when he was permanently banned from the securities industry in 2003. The sovereign exposure is off by a factor of 10. The commercial real estate figures are off by a factor of four. The mortgage analysis was provided by a hedge fund that has acknowledged it will benefit if our stock price declines. The recommendations on goodwill accounting would be prohibited by generally acceptable accounting practices. Traditional bank valuation relies upon tangible book value per share, which excludes by definition 100 percent of goodwill and other intangibles. As of June 30, our tangible book value per share was $12.65.

Henry Blodgett is of course the same Henry Blodgett who runs the Business Insider and was charged by the SEC with securities fraud. He agreed to a permanent ban from the securities industry and paid a $2 million fine plus a $2 million disgorgement. The former New York Attorney General Eliot Spitzer accused Blodget, who was Merrill Lynch & Co.’s top Internet analyst, of publishing “buy” and “sell” ratings on stocks based on how much investment banking business Merrill would get.

Sure, BAC’s CEO Brian Moynihan did a full interview on CNBC and said they didn’t need to raise capital, but when fear starts in on the stock market, and maybe gurus like John Paulson say their selling shares of BAC, and then there are perhaps margin calls, you get further sell offs in the stock that feed more selling. Yeah, it’s a sort of self fulfilling type of vicious cycle. The best thing for Bank of America would be to go under the radar for a while. Stay out of the headlines. We’ll see.

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