Nationalization fears slam Bank of America shares again
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Bank of America Corp. shares plummeted to a 25-year low early today amid intensifying fears that the bank will be nationalized, wiping out common shareholders.
The stock fell as low as $3.77, but has since rebounded somewhat, and was off 25 cents, or 5%, to $4.45 at about 10:15 a.m. PST.
Investors have been fleeing the stock since early in January, when rumors began to surface that BofA would need a second bailout package from the government. That package, including a $20-billion capital infusion and a federal guarantee on $118 billion of the bank’s bad loans, was announced on Jan. 15.
BofA’s shares have lost nearly 70% year to date, and have fallen for six straight sessions, including today’s action.
There has been no news this week, and that’s part of the problem: BofA is saying nothing to make remaining shareholders feel better about the bank’s prospects of surviving without a government takeover.
Bloomberg News notes:
The reluctance of Kenneth Lewis, Bank of America’s chief executive officer, to speak out is hurting the company, said Tony Plath, a finance professor at the University of North Carolina at Charlotte. ‘He’s not communicating with the public because it’s not his style and it’s in the Bank of America culture to put the sandbags up,’ Plath said. ‘You don’t have to communicate when you are privately held, but with the government now involved you have to get out of your tower and talk to the people on the ground floor.’
-- Tom Petruno