Bankamerica CEO Moynihan fibs…and of course, no one calling him on the carpet.

John McDonald – Sanford C. Bernstein & Co., Inc.: So there’s no pressure to raise capital from regulatory side of things?

CEO Brian Moynihan: No.

This was not the only time Mr. Moynihan said they would not need to raise capital. Days later:

Enter Warren:

Yes…the deal that was supposedly thought of in a bath tub. Warren supposedly contacted Bank of America CEO Brian Moynihan…not the other way around. Of course, BAC did not need to raise capital but still let Berkshire Hathaway invest $5 billion in preferred shares paying a 6% dividend. Berkshire also received warrants to purchase 700 million shares of Bank of America at $7.14…another great deal for Warren. Just the beginning:

Just sell shares:

Bank of America announced offerings of 400 million common shares and $3 billion in debt to retire preferred share and trust preferred securities. Of course, BAC did not need to raise capital.

Gotta keep raising capital:

Very soon after Moynihan said BAC did not need to raise capital, it was found out that they were selling shares in China Construction Bank.To date, approximately $15 billion has been sold. Yes…BAC did not need to raise capital. By the way, this sale was done while the construction shares were down markedly. Many analysts are now saying they are not done as $50 billion in assets sales since Jan 2010 will not be enough. So I ask…what the heck is under the hood at BAC? The stock price action says it all.

SPECIAL NOTE: Be sure to register now for my next live Webinar on Saturday January 21, 2012. I will talk about the important implications of early-January’s market action…and much more.  Click here for more information


Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.