Bank Of America Stock Falls 20 Percent After $10 Billion Lawsuit
Bank of America stocks tumbled 20 percent on Monday as investors reacted in part to a $10 billion lawsuit that the insurance corporation American International Group brought against the company.
The dramatic single-day drop was reminiscent of market plunges during the financial crisis of 2008, and stood out even amongst a market-wide spate of sell-offs that left the Dow Jones industrial average more than 600 points down on the day.
BofA closed at $6.51 on Monday, a 20.32 percent drop from the opening bell, after a day of rapid stock declines that saw the Dow shed 634 points.
On Monday, AIG announced that it was suing Bank of America for more than $10 billion, alleging that BofA, and its acquisitions Merrill Lynch and Countrywide Financial, participated in “massive fraud” when they sold mortgage-backed securities to AIG between 2005 and 2007. AIG says that more than 40 percent of the mortgages were presented as being more secure than they actually were.
The slide in BofA stocks, the worst since April 2009, was reflected in declines among other major lenders. Citigroup was down 16 percent at the end of the day, Morgan Stanley closed down 14 percent, JPMorgan and Wells Fargo were each down 9 percent and Goldman Sachs fell 6 percent.
Hmmmm, 20.32 percent drop... Maybe it's about time that "what goes around, comes around...." The teabaggers were cheering when it was announced that the US credit rating had been downgraded... I find this MUCH more to cheer about...
Caveat emptor? Nope, just sue instead. I could see that home prices were way too high and too many people who shouldn't qualify were being approved, why couldn't AIG?
Thomas Sowell: There are no solutions, just trade-offs.
