Bank of America shares take another hit

The Charlotte ObserverAugust 23, 2011 

Bank of America Corp. shares took another beating on Monday, amid continued concerns about its mortgage liabilities.

The Charlotte bank's shares closed down nearly 8 percent at $6.42, by far the biggest drop among members of the Dow Jones Industrial Average. That's lower than the stock closed on Aug. 8, when it ended the day at $6.51 after Standard & Poor's downgraded U.S. debt on the previous Friday.

Major stock indices ended the day with modest gains, although stocks of other large banks also finished in negative territory.

Investors are focused on the bank's potential mortgage-related expenses and the uncertain state of the economy, rather than chief executive Brian Moynihan's efforts to reduce costs and sell off noncore assets, said Frank Barkocy, director of research at Mendon Capital Advisors.

"It's really getting to be unreal, just the pressure the stock is under," he said. "Every issue out there seems to be focused on Bank of America."

Along with other large lenders, Bank of America is in negotiations with the U.S. Justice Department and state attorneys general to settle allegations related to robo-signing and other foreclosure-related errors. But those talks have apparently stalled over the banks' push for a broad release over future legal claims.

New York Attorney General Eric Schneiderman is pursuing a separate investigation of the packaging of mortgages into securities, but faces pressure from the Obama administration to back a broader settlement, said sources familiar with the situation.

"While our federal and state counterparts may be working toward the same goals, ongoing investigations by attorneys general cannot be shut down by efforts to settle quickly and those responsible must be held accountable," said Danny Kanner, a spokesman for Schneiderman.

Bank of America continues to believe a global settlement is the "best way to get the housing market going again in every state," spokesman Dan Frahm said.

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