SOURCE: The Bedford Report

The Bedford Report

October 20, 2010 08:46 ET

Major Banks Downplay Foreclosure Crisis' Effect on Earnings

The Bedford Report Provides Analyst Research on Bank of America & Keycorp

NEW YORK, NY--(Marketwire - October 20, 2010) -  Major Bank stocks struggled immensely last week as investors became concerned that the mortgage foreclosure crisis could hinder the banks' earnings. Legal experts and analysts alike argued that the recent discovery of flawed documentation being used in foreclosure proceedings could force banks to buy back bad loans at their face value -- which is usually substantially above their market value -- implying there could be massive losses. The majority of the banks in question have dismissed these concerns, and it appears as though the banking industry's better-than-expected earnings being posted this quarter are calming investor's nerves. The Bedford Report examines the outlook for companies in the Major Banks Industry and provides research reports on Bank of America Corporation (NYSE: BAC) and KeyCorp (NYSE: KEY). Access to the full company reports can be found at:

Last week, a report from Manal Mehta and Branch Hill Capital stirred the markets when it argued that Bank of America could be one of the biggest losers in this foreclosure mess due in part to the liabilities it took on when it acquired Countrywide. In fact, last month, bond insurer Ambac filed suit against Bank of America over the lending practices of Countrywide, the mortgage lending business the bank bought, saying the lender failed to follow its own standards when making loans. Bank of America was the first bank to halt foreclosures because of legal problems with the way foreclosure proceedings were initiated, and the bank eventually put a moratorium on foreclosures in all 50 states.

The Bedford Report releases regular market updates on the Major Banking Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us for free at and get exclusive access to our numerous analyst reports and industry newsletters.

Yesterday Bank of America reported earnings of $3.1 billion without one-time charges, or 27 cents per share. The company suffered a noncash one-time charge of $10.4 billion due to a write-down in its credit card unit. Bank of America also said it had received $18 billion in claims about faulty home loans that it may have to repurchase. Executives for the bank calmed some investor's worries when they said the bank would partially lift its nationwide foreclosure halt.

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