Remember back in August after the phoney "debt ceiling crisis" that the GOP ginned up? Standard and Poor's (S&P) downgraded the credit ranking of the United States. Two other rating agencies, Moody's and Fitch's, did NOT follow suit.
This morning comes news however that Fitch's has downgraded the Viability Rating to NEGATIVE of.....Bank of America!
The drivers for placing Bank of America Corporation's Viability Rating on Rating Watch Negative center on heightened uncertainties regarding capital market and economic conditions and implications for future performance. In addition, Fitch will also perform updated analysis on the company's litigation-related mortgage risks as well as the company's capital enhancement plans.
Anyone reading these boards in the financial sector? Can you give us an inside take on the significance of this move by Fitch? Pretty common? Unusual? From where I sit "Viability Rating: Negative" sure sounds like bad news for somebody. But if someone can add to the implications we will all learn from you. Thanks!
As I recently posted in a comment, this couldn't have anything to do with BofA's stock price, could it? I mean, talk about a mean mess!
Stock price: BofA's 52 week high (and co-incidentally its high for the year) was mid-January of 2011: $15.31.
Did a steady slide down to $10 by the end of July (that's losing 1/3 of its value in 8 months!), then celebrated the debt ceiling "crisis" resolution of early August by falling off the table in mere days to under $7/share.
They had a "dead cat bounce" to over $8 by the end of August (ooohhh!....aaaaahhh!) and then resumed the slide. Start of October was a 52-week LOW of $5.13.
Opened this morning at $6.29.
However if you do the math: 15.31- 6.29 = 9.02.
That means from mid-January one of the 5 largest "too big too fail" banks has managed to lose 58.91% of it value for its owners (the stockholders!).
And the owners/stockholders want to pay multi-million dollar bonuses to the execs for losing 59% of their worth in less than a year BECAUSE......?????????