Saturday, October 16, 2010

Bank of America(BAC)

Bank of America (BAC)-
                Bank of America had a steep drop Friday of almost 5%. They are also down a little over 9% for the week, which gives them their low for the year. This stock will continue to drop as the rumors continue to swirl. Here is a great article about Bank of America and the banking industry:
In the article, it speaks of Bank of America potentially having to repay Fannie Mae back for their deception of the mortgages. As of now this will not happen with the current evidence against Bank of America. However, they did assume the risk of Countrywide when they took them over. Countrywide, was one of the firms that were criticized greatly for their lending practices, before the housing crash.
After all the rumors settle and you look at this bank they are still a strong company. I don’t believe they will be on the hook to pay back Fannie Mae. The web of deceit runs to deep and to be able to place blame on one or another will be too hard.
I fully believe this stock will get under $10, before it will encounter strong support.  Once it reaches this point it will be a great buy and hold for the next couple of years. Their profits will return as they continue to weed out these bad mortgages and management continues the progress they have already achieved.

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