Bank of America shares tumble again
This post has been corrected. See the note at the bottom for details.
News of another huge mortgage lawsuit targeting Bank of America Corp., and of a hedge-fund investor dumping BofA shares, sent the bank's stock tumbling Monday.
Bank of America shares fell $1.18, or 14%, to $6.99 in midday trading Monday. That's down more than 50% from their 52-week high of $15.31.
The decline followed reports that the giant insurer American International Group, which was bailed out by the government during the financial crisis, would sue BofA for $10 billion in losses on mortgage securities, and that hedge-fund investor David Tepper had sold his stake in BofA.
The Charlotte, N.C.-based bank took $20 billion in charges during the second quarter to deal with lawsuits and other problems stemming from its 2008 acquisition of Calabasas-based Countrywide Financial Corp., which had become the largest home lender by trying to dominate every high-risk mortgage category.
There's a growing list of mortgage-securities holders who contend the loans backing the bonds were misrepresented and, as independent bank analyst Nancy Bush told The Times last month, "The Street believes these types of charges are just going to keep dinging them."
Tepper, whose Appaloosa Management had taken big positions in battered bank shares, apparently agreed, reportedly selling all his 17 million shares of Bank of America as well as those in San Francisco's Wells Fargo & Co.
For the record, 12:12 p.m., Aug. 8: An earlier version of this post referred to hedge-fund investor David Tepper as David Teppen.
-- E. Scott Reckard
Photo credit: Lucas Jackson / Reuters