A small explanation why the BofA expects difficult times in the next few months!

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“New FDIC data shows Bank of America, $BAC, faces $100+ BILLION in bond market paper losses.

$BAC claims it’s not an issue as they don’t plan to sell.

Sound familiar? That’s because it is.

Both Silicon Valley Bank and First Republic collapsed for this reason.

Some background:

Bank of America is bearing the cost of decisions made three years ago.

They decided to pump the majority of $670 billion in pandemic-era deposit inflows into debt markets.

This was at a time when bonds traded at historically high prices and low yields.

As interest rate rise at their fastest pace in history, these bonds are facing $109 billion in paper losses.

Both Silicon Valley Bank and First Republic collapsed for the same reason.

When depositors wanted their money, they were forced to sell these bonds at a loss.

It’s also worth noting that unrealized bond market losses are an INDUSTRY-WIDE issue.

Total unrealized losses are at a record $620 billion at US banks.

This is well beyond the peak of ~$75 billion in 2008.”

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Bank Of America: $109 Billion Of Paper Losses Spell Earnings Trouble

h/t RedditIsOwendByTheWS


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