BoA posts massive loss

Bank of America

For some on Wall Street, things are looking up. Some of the US's largest financial institutions have reported massive profits from their investment banking units, but, despite this, consumer lending portfolios continue to dampen spirits - and, in some cases, wash out any sense of hope in the all together.

The issue is simple: cash-strapped and struggling Americans - the everyday customer of any bank's facilities - are struggling to repay debt. Today, according to reports in the New York Times, Bank of America was the latest of Wall Street's giants to fall foul of the consumer lending conundrum.

The firm, who had acquired struggling rival Merrill Lynch in 2008 at the pinnacle of the financial crisis, reported a fourth-quarter net loss of $5.2 billion (60 cents a share), compared with a net loss of $2.4 billion a year earlier. Its a significant blow to the firm, who has been expected to post a loss of just 52 cents a share, according to analysts.

The loss means that, for the year, the bank lost $2.2 billion or 29 cents a share, compared with a profit of $2.6 billion or 54 cents in 2008.

TARP

According to reports from the firm, Bank of America said that a $45 billion repayment to the Treasury of money from the Troubled Asset Relief Program weighed on its quarterly results, with an associated cost of about $4 billion. Reports suggest that without the TARP repayment and dividends it paid on preferred stock, it said its fourth-quarter loss would have been $194 million.

As such the New York Times reports that the financial giant is "encouraged" by signs that the economy is improving. However, according to a statement Brian T.Moynihan, the bank's new chief executive, "That said, economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth."

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