"That is so absurd I can't believe anyone would even write it. This is the largest bank in the United States," said Bove of Bank of America. "It has business with one out of every five households in the country. The assumption is that the United States government would allow this bank to go under and pull all of those other people under with it!"
"In my view, I think Moody's has lost its mind," said Bove, known for his outspoken views.
"Bank of America is in a position where it is shrinking and paying off its borrowings. If you take a look a the total amount of cash on its balance sheet versus the total amount of longer term debt on its balance sheet, bank of America has enough money to pay off every dime of short-term debt tomorrow," he said. He noted Bank of America has $140 billion in cash, while its short term debt and trading obligations total $125 billion.
"Basically you can't run this company out of business," Bove said. Bove said Bank of America could solve ties problems if it were to put its Countrywide mortgage business it acquired into bankruptcy.
If Bank of America went under, basically it has to call all the loans it has—$940 billion in loans outstanding. In addition, it has $1.38 trillion in deposits. You think the FDIC can cover that?...The idea that the U.S. government would allow it to fail is beyond the realm of possibilities," Bove said.
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