A Billion Here, A Billion There
I guess there are too many "cooked books" to "reconcile".
Gary Rule #1 - People are fucking idiots.
It is reassuring to know that the people running the banks are still fucking idiots.
America’s biggest bank discovered a $4 billion accounting "error" on Monday, and is suspending its share buyback program and planned quarterly dividend. The mistake went unnoticed for several years and brings into question how ‘healthy’ Bank of America is.
After reporting the miscalculation to the Federal Reserve, Bank of America will also have to re-do its stress tests, to ensure it isn’t "too big" and has sufficient capital reserves, the New York Times reports.
Stocks have fallen 6.27 percent on the news, the most since November 2012. Shares tumbled to $14.95 by market close in New York on Monday, erasing all of the 2014 gains reports RT News.
The "error" was sourced to Merrill Lynch, where lower-level employees botched the numbers they submit to the financial authorities for a quarterly securities filing.
The gaffe also went undiscovered by the bank’s board of directors as well as PricewaterhouseCoopers, its external auditor. The US Federal Reserve also missed the blunder.
Stress tests, called Comprehensive Capital Analysis and Review, are a way for the US Federal Reserve to assess whether financial intuitions have adequate capital. The protocol is part of the Dodd-Frank Act, which seeks to avoid a repeat of the 2008 collapse with precautionary regulations.
In March Bank of America passed its Federal Reserve stress test even though it provided faulty information. Citigroup Inc. was one of five banks that failed the test. According to Bank of America’s first quarter earnings report, it has $134 billion in Tier 1 capital, which has now been reduced to $130 billion.
“Bank of America must address the quantitative errors in its regulatory capital calculations as part of the resubmission and must undertake a review of its regulatory capital reporting to help ensure there are no further errors,” the US Federal Reserve said in a statement.