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Taking Stock: Bank of America too big, complex to be manageable

Malcolm Berko: Big players on Wall Street have invested big in Bank of America, which may trump all concerns about the company's current operations and past indiscretions.
BY Malcolm Berko Published: February 24, 2013

The settlement with mortgage-bond holders cost $8.5 billion. Freddie Mac cost $2.8 billion, and the Merrill Lynch shareholders' action was a $2.4 billion hit. Then there are numerous smaller, multiple-million-dollar claims filed by ambulance-chasing lawyers who are standing in line with open purses. But wonder of wonders: How have the BAC executives, who are responsible for stealing billions from millions of Americans, managed to stay out of prison and keep their jobs? These lawsuits cost BAC billions, but the silk suits, whose illegal activities nearly ruined the banking system, are immune from prosecution.

All this nasty scheming aside, BAC shares are likelier to rise than they are to fall in value, because that's the way Wall Street works.

The mighty Vanguard owns 940 million shares. BlackRock owns 300 million shares. Each of the venerable Citigroup, JPMorgan Chase, Dodge & Cox and Goldman Sachs owns more than 200 million shares, and a few lesser titans own in excess of 100 million shares. These big guys don't give a hoot about BAC's conspiracies, and their combined might makes BAC right. They know that BAC's book value is $20.82 per share, that there's more than $58 in cash per share (including customer deposits), that there's an operating cash flow of $37 billion, that Warren Buffett has billions invested in BAC and that the dividend may be raised later this year. And they also know that 13 of the 24 analysts who carefully follow BAC for New York's financial mafia — including JPMorgan Chase, Goldman Sachs, Citigroup, UBS and Wells Fargo — have a solid buy rating on this stock.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at