Bank of America: bank undergoing overhaul

Bank of America CEO Brian Moynihan defended the embattled bank to investors Wednesday, the same day its stock fell nearly 11 per cent. The bank has seen its share price plummet and has lost money in three of the six quarters since Moynihan became CEO in January 2010. He said he felt that acutely. "Everybody should rest assured that my entire net worth is in this company," he said on a conference call with investors hosted by Fairholme Capital Management. According to FactSet, Fairholme owns 93 million shares, or just under 1 per cent, of Bank of America's outstanding shares. He said the Charlotte, North Carolina-based bank is in the middle of a "multi-year transformation" that might be painful now, but will stabilise Bank of America long-term. Article continues below "We've been in this business for 230 years," he said. "We'll be in this business for another 230 years." The entire banking industry has been hit hard in recent weeks. Financial stocks have had the worst declines of any of the ten industry groups in the S&P 500. Investors are concerned about banks' exposure to European debt problems. If European governments default on their bonds, that could start a chain reaction that hurts the United States, because large US banks own European bank debt and have investments in those same banks. These worries only add to concerns about slow growth in the US economy and the weight of bad mortgage loans that banks are still unloading. Mortgage exposure Bank of America has fared especially poorly, largely because of its mortgage exposure. Like other banks, it is grappling with lawsuits from investors who say they were misled into buying lousy mortgage-backed securities before the financial crisis took hold. But Bank of America is especially vulnerable; it is the country's largest mortgage servicer because of its 2008 purchase of Countrywide Financial Corp, a lender known for exotic mortgages. The $4 billion (Dh14.7 billion) purchase has ended up costing the bank billions more in investor lawsuits and bad-loan write-downs. Bank of America shares plummeted nearly 11 per cent on Wednesday to $6.77. The bank's stock has lost more than half its value since Moynihan became CEO. The bank has also reported total losses of more than $9 billion in that time frame, largely due to mortgage-related settlements.