Bank of America’s big banks face new pressures: report
Posted On May 24, 2021
Industrial bank BofA has been hit by another wave of bad news from its corporate peers, as the U.S. Securities and Exchange Commission announced that it will soon require all big banks to report information on how they invest capital, which could be particularly important for the banks’ most profitable clients.
The S.E.C. action comes as the banks are grappling with a series of losses at the end of 2016 and early 2017, and with several banks facing scrutiny in investigations into possible manipulation of benchmark interest rates.
BofA shares were down about 1.7 percent at $54.37.
Shares of other U.K.-based banks such as Lloyds Banking Group and RBS also fell.
Banks have been grappling with the fallout from the financial crisis that started in 2008, when a wave of risky mortgage-backed securities, or MBS, led to the 2008 financial crisis.
Banks that were hit hardest by the downturn lost a quarter of their value.
The S.A.T.S., a measure of the extent of the problem, fell to a 10-year low in July 2016.
The banks’ exposure to MBS also led to more than a half-billion dollars in losses for banks that had been holding out on issuing new loans.
Banks, which have about $40 trillion in assets, have since started to reevaluate whether to extend credit.
While banks have been under pressure to improve their risk profiles, they have struggled to provide adequate guidance to investors about their investments.
Last month, BofB issued a new “high-risk” mortgage-bond product that was supposed to address the problems facing the banks.
The company said it would make more information available to investors, but did not say how.
The announcement by the S.EA follows a March ruling by the U