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(The Wire)   Bank of America figures out it made a teeny tiny accounting "oopsie" and actually has about $4 billion less that it thought. Naturally, according to Wall St., The real villain here is the Fed for not catching the mistake sooner   (thewire.com ) divider line
    More: Asinine, WALL ST, Federal Reserve, Bank of America, history, share repurchase, CLSA, sooner  
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1016 clicks; posted to Business » on 29 Apr 2014 at 1:18 PM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-04-29 12:15:38 PM  
Bank of America figures out it made a teeny tiny accounting "oopsie" and actually has about $4 billion less that it thought.

Oh well hell they can just take that out of petty cash.
 
2014-04-29 12:20:59 PM  
The executive continued, "When the Fed can wipe out $10B of value at one of the country's largest banks overnight for a mistake it didn't spot for several years, bank investors are going to remain very nervous." BofA's stock dropped 6 percent Monday night.


What happens when you accidentally deposit a million dollars into a customer account and don't notice it for a while?
 
2014-04-29 12:40:09 PM  
Also, did they really wipe it out, or just point out that it wasn't ever really there?
 
2014-04-29 12:42:19 PM  
www.nathandriver.com
Bank error not in your favor.  Do not pass "Go," do not collect four billion dollars.
 
2014-04-29 12:48:53 PM  
"We can't handle our own money, and it's the government's fault" really doesn't win me over.
 
2014-04-29 12:58:39 PM  
And, of course, the real problem here is that the bank may not be able to pay its shareholders as much of a dividend increase as they'd been promising.
 
2014-04-29 01:29:18 PM  
OK, how do you lose $4bn?  Did they forget to alter the macros in some Excel spreadsheet?

/Yes, that actually happened at a old job.
 
2014-04-29 01:32:02 PM  
Small accounting error? Small?
s3-ak.buzzfed.com
 
2014-04-29 01:32:28 PM  
Easy to blame BofA here but seems like some of the blame goes to the opaque design and implementation of stress testing by the Fed. Lot of confusion even among very high paid risk officers at the big banks about how the accounting works ... And the Fed with its battalion of on-site inspectors didn't catch this error itself even though BofA had been reporting this way for several years.

So the "high paid risk officers" at BofA are confused about how accounting works?

Yeah, it really is easy to blame BofA.
 
2014-04-29 01:43:19 PM  

browneye: Bank of America figures out it made a teeny tiny accounting "oopsie" and actually has about $4 billion less that it thought.

Oh well hell they can just take that out of petty cash.


I get bent out of shape when I have $40 less than I thought. :(
 
2014-04-29 02:10:29 PM  

skrame: browneye: Bank of America figures out it made a teeny tiny accounting "oopsie" and actually has about $4 billion less that it thought.

Oh well hell they can just take that out of petty cash.

I get bent out of shape when I have $40 less than I thought. :(


That's because $40 "costs" you roughly what $4 billion "costs" boa , which is a bit stagerring if you think about it too long
 
2014-04-29 02:35:47 PM  
In related news, I've just launched a public company worth a whopping $4bn, after our accounting department (my cat) just told us our revenues went from $0 to $4bn.  This has been confirmed by our auditors (my other cat).

We start trading on the NYSE tomorrow.  Based on our  the IPO is expected to be in the neighbourhood of $1000/share.  Better get in early if you want a chance at this amazing opportunity.
 
2014-04-29 02:37:18 PM  
Tomorrow's announcement will raise that figure to $6 billion. By the early part of next week, we'll probably find out that it's closer to $8 billion.
 
2014-04-29 03:06:30 PM  

impaler: Easy to blame BofA here but seems like some of the blame goes to the opaque design and implementation of stress testing by the Fed. Lot of confusion even among very high paid risk officers at the big banks about how the accounting works ... And the Fed with its battalion of on-site inspectors didn't catch this error itself even though BofA had been reporting this way for several years.

So the "high paid risk officers" at BofA are confused about how accounting works?

Yeah, it really is easy to blame BofA.


You know well enough that this isn't simple "accounting", but if you read TFA it has to do with how they calculate capital adequacy under complicated Fed stress tests.

TFA doesn't give enough detail to determine whether boa or the fed is to blame, but it's very possible that it's the Feds fault. They dictate many of the rules around how to calculate capital and many of the rules have been unclear.

It's like counting your score at the end of football game and thinking you won and having the refs declare you the winner, then the refs call you back two weeks later telling you that you actually lost because field goals under 30 yards are only two points instead of 3 under the new rules.
 
2014-04-29 03:13:25 PM  
i.imgur.com
 
2014-04-29 03:14:04 PM  

Magorn: That's because $40 "costs" you roughly what $4 billion "costs" boa , which is a bit stagerring if you think about it too long


I only have to think about it for a second before I wonder where I went wrong with my life.
 
2014-04-29 03:22:46 PM  

MessyDwarf: Small accounting error? Small?
[s3-ak.buzzfed.com image 425x368]


To be fair, it will be pretty small when we link back to this thread in 10 years.
 
2014-04-29 03:26:33 PM  

Debeo Summa Credo: impaler: 

It's like counting your score at the end of football game and thinking you won and having the refs declare you the winner, then the refs call you back two weeks later telling you that you actually lost because field goals under 30 yards are only two points instead of 3 under the new rules.


Yeah, that's a lot like how we count inventory at my company.

/which I'm in charge of
 
ZAZ [TotalFark]
2014-04-29 03:56:12 PM  
According to the press release: "The company correctly adjusted for the cumulative unrealized change on structured notes accounted for under the fair value option, but it incorrectly adjusted for cumulative realized losses on Merrill Lynch issued structured notes that had matured or were redeemed by the company subsequent to the date of the Merrill Lynch acquisition."
 
2014-04-29 03:57:09 PM  
...and this is further proof that we need fewer federal regulations for the banking industry, right?
 
2014-04-29 04:01:42 PM  

Pocket Ninja: And, of course, the real problem here is that the bank may not be able to pay its shareholders as much of a dividend increase as they'd been promising.



That and the bigger bonuses because of it, things should all but just about balance out.
 
2014-04-29 04:03:08 PM  
The executive continued, "When the Fed can wipe out $10B of value at one of the country's largest banks overnight for a mistake it didn't spot for several years, bank investors are going to remain very nervous." BofA's stock dropped 6 percent Monday night.

If you invest in a bank, you deserve to lose every penny.
 
2014-04-29 05:38:02 PM  

unyon: In related news, I've just launched a public company worth a whopping $4bn, after our accounting department (my cat) just told us our revenues went from $0 to $4bn.  This has been confirmed by our auditors (my other cat).

We start trading on the NYSE tomorrow.  Based on our  the IPO is expected to be in the neighbourhood of $1000/share.  Better get in early if you want a chance at this amazing opportunity.


And bring a can of Tuna
 
2014-04-29 07:36:58 PM  
4 billion... out of how much?  Throwing numbers around like that without context is entirely useless.
 
2014-04-29 07:38:28 PM  

"The cop didn't search me, so it's his fault I shot and murdered that guy!", says an unnamed Bank of America executive

Really? That's a hell of a spin - yes, the Fed should understand that the relationship between the Federal Reserve and the financial institutions it's policing has become far more adversarial, and therefore should be more aggressive in its fact-checking, but, no, the idea that it's the Fed's fault because Bank of America lied, for years, about its position to everyone is just farking ludicrous.

BoA, please, get your shiat together.
 
2014-04-29 07:45:03 PM  

Alonjar: 4 billion... out of how much?  Throwing numbers around like that without context is entirely useless.


How much context do you need for that, honestly? For a bank, that's huge.

I'm betting that we know about this little "oopsie" because that's the difference between compliance the new Fed guidelines for liquidity, and being shut down by the Fed for critical non-compliance of the new liquidity requirements.

Why do you think this came out now, less than six months after the Fed proposed the new guidelines?
 
2014-04-29 08:17:56 PM  

Debeo Summa Credo: impaler: Easy to blame BofA here but seems like some of the blame goes to the opaque design and implementation of stress testing by the Fed. Lot of confusion even among very high paid risk officers at the big banks about how the accounting works ... And the Fed with its battalion of on-site inspectors didn't catch this error itself even though BofA had been reporting this way for several years.

So the "high paid risk officers" at BofA are confused about how accounting works?

Yeah, it really is easy to blame BofA.

You know well enough that this isn't simple "accounting", but if you read TFA it has to do with how they calculate capital adequacy under complicated Fed stress tests.

TFA doesn't give enough detail to determine whether boa or the fed is to blame, but it's very possible that it's the Feds fault. They dictate many of the rules around how to calculate capital and many of the rules have been unclear.

It's like counting your score at the end of football game and thinking you won and having the refs declare you the winner, then the refs call you back two weeks later telling you that you actually lost because field goals under 30 yards are only two points instead of 3 under the new rules.


As the guy who was responsible for a good part of the independent foreclosure review program for a very large bank I can tell you that "unclear" is a very generous descriptor.

Basically after 2 years of trying to clearly define "harm" and "remediation" the OCC just said "fark it, just write us a big check and we'll hand out the money". All in the bank spent over a billion on the project trying to keep up with their constant changes, BEFORE we wrote them the big check at the end.

All the CFPB work last year was another cluster fark of ambiguity and late changes to definitions, so my bet is on the fed discovering an error in their spreadsheet and not wanting to own up to it. Nixing the buy back and the dividend payout is bullshiat IMO.

Yeah I'm a little jaded.
 
2014-04-29 09:34:58 PM  
Well that's what they get for hiring Rick Perry as their accountant.
 
2014-04-29 10:05:16 PM  

Alonjar: 4 billion... out of how much?  Throwing numbers around like that without context is entirely useless.


No shiat, these "OMG big scary number!!" articles are idiotic.

Looks like they're worth around $75 billion, so $4 billion isn't exactly pocket change, but also won't make or break the company.
 
2014-04-30 01:54:15 AM  

MrEricSir: Alonjar: 4 billion... out of how much?  Throwing numbers around like that without context is entirely useless.

No shiat, these "OMG big scary number!!" articles are idiotic.

Looks like they're worth around $75 billion, so $4 billion isn't exactly pocket change, but also won't make or break the company.


But it's enough to make stockholders nervous, and account holders nervous enough to run the bank. Which can make a lot of other big things happen.
 
2014-04-30 02:17:38 AM  
gs1.wac.edgecastcdn.net


Seriously, we have these machines now that are really good at keeping track complicated numbers and they have the ability to even keep track of all of the changes and make pretty graphs and reports automatically. Is your business too tight to afford the machines and training for your employees?

"Did you check in the coach cushions?" -Mrs. Destroyer
 
2014-04-30 08:03:54 AM  
2.bp.blogspot.com

                                                      "shiat happens."
 
2014-04-30 09:21:02 AM  

FormlessOne: How much context do you need for that, honestly? For a bank, that's huge.


MrEricSir: No shiat, these "OMG big scary number!!" articles are idiotic.

Looks like they're worth around $75 billion, so $4 billion isn't exactly pocket change, but also won't make or break the company.



Alright, so I looked it up and Bank of America has  $1,433,716,000,000in their care.   Yes, thats 1.433  trilliondollars.  So they misplaced 0.002% of their assets.
 
2014-04-30 09:24:25 AM  
Sorry, I put the decimal in the wrong place.  They misplaced 0.2% of their assets.
 
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