Today Henry Blodget examines why Bank of America is getting hammered. Most telling is this statement:
Bank of America has about $222 billion of “book value”–the amount that’s supposedly left over when you subtract Bank of America’s stated liabilities from its stated assets.
Countrywide, which was taken over by Bank of America, was the 800 pound gorilla of Stated-Income-Stated-Asset or SISA mortgages: where those borrower figures were literally just stated and not verified on loan applications. And guess what?
Those stated figures were exaggerated, and Countrywide fell into BofA’s arms.
Blodget does some verification of the inputs into that book value, and guess what?