Tuesday, January 22, 2008

Bank of America Is Columbia A Problem?

Bank of America (BAC) came out with reduced earnings which was to be expected. The subprime slime and other deterioting credit quality issues have found there way onto this balance sheet as well.

Did they write off enough? The first loss is your sweetest. No one expects any homerun stand up and salute results in today's environment. So why not aggressively sweep out the problems and near problems now and set up for the future. A constant oozz of disappointing results will only create additional doubt in the future.

One item that concerns is this quote from the press release

"Columbia Management net revenue declined 2 percent to $1.51 billion,reflecting about $400 million in support for certain cash funds offset in part by 21 percent growth in asset management fees including the addition of U.S. Trust. Net income decreased 41 percent to $196 million."

This essentially means that Bank of America felt compelled to buy $400 million of what previously were accounted for as someone else's problems. Can we get some or any comfort as to what the future holds for this and similiar type problems where sudddenly an off balance sheet item reappears as a complete loss.