Wednesday, 24 August 2011

US bank in trouble

Bank of America's share nosedive fuels fears of a second credit crunch

The rapidly declining housing market is heightening concern that the bank will need to make huge write-offs

the Guardian
Tuesday 23 August 2011 20.45 BST

Bank of America continued its tailspin on Tuesday as shares in the largest US bank tumbled by another 6.4% to their lowest level since March 2009, fuelling fears of a second banking crisis.

As concerns mounted that BoA will need to take huge additional write-offs on bad mortgages, the cost of insuring the group's debt jumped to record levels and investors became increasingly concerned that the financial system could be facing a fresh credit crunch.

BoA's share-price fall followed a 7.9% drop on Monday, which took the stock to less than half its value at the start of the year – a decline that wiped about $65bn from its market capitalisation.

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