Nervous investors drove down shares of Bank of America a punishing 26 percent on Tuesday, its biggest one-day decline since at least 1980, the day after the Charlotte bank announced a big drop in earnings and an unexpected dividend cut.
The bank had said Monday that third-quarter profits fell 68 percent from the year before, as defaults spread to almost all areas of consumer lending.
Still, analysts on Tuesday continued to view Bank of America as one of the few stalwarts of the industry. “Their earnings weren't great,” said James Early, an analyst at The Motley Fool. “But nobody's doing great in this market.”
Bank of America said Monday that it hopes to close its purchase of Merrill Lynch earlier than first announced – by the end of this year, instead of by the end of March.
The bank also said it will assume the $21 billion in outstanding debt of Countrywide Financial, the California mortgage lender it purchased on July 1.
That was good news for Countrywide's bondholders, who had fretted that Bank of America would leave them in the cold. In an April regulatory filing, the bank had said there was “no assurance that any of such debt would be redeemed, assumed or guaranteed.”
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