Wednesday, August 24, 2011

Put up or shut up time for Bank of America

With its stock continuing to decline, Bank of America went on the offensive against its critics.  A strategy that is unlikely to succeed so long as BofA hides its current asset and liability-level data behind its opaque financial reporting.

In fact, the last time I saw financial institutions engage their critics like this was in 2008 with Lehman Brothers and RBS.  These firms also hid their current asset and liability-level data behind opaque financial reporting.

Please note, I do not know whether BofA or its critics are right.

What I do know is that BofA is in possession of facts, its current asset and liability-level data, that are not available to other market participants.  If these facts were made available and they supported BofA, then the critics would go away.  In fact, the mere announcement that these facts were going to be disclosed would tend to silence the critics as the critics would assume the facts would not be voluntarily disclosed if they did not support BofA.

That BofA does not make these facts available strengthens the argument of its critics.  Critics see the failure to disclose all its current asset and liability-level data as confirmation that BofA has something to hide.

Like his predecessors at Lehman and RBS, BofA CEO Brian Moynihan is at that time to either put up current asset and liability-level data or shut up.

In case he elects to put up, BofA knows how to contact your humble blogger for assistance in coordinating this disclosure.

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