Accounting fraud allows BofA to post phantom profit for Q1 2011

Just two days of the accounting fraud of JPMorgan, it is now Bank of America's turn to do the same to post a phantom profit.

Basically, the bank's profit were $2.05 billion while the reduction in loan loss reserves were $2.2 billion. So the bank is operating at a loss. Moreover, they reduced the reserves while the banks mortgage units losses are widening (from $2.1 billion a year ago, to $2.4 billion).

This is fraud, and the exuberant market and the regulators are happy to close their eyes on it — for now. When the mood sours, these frauds will all of the sudden make the headlines, and people will act surprised that such things could have happened with nobody noticing.
April 15 (Bloomberg) -- Bank of America Corp., the largest U.S. lender by assets, reported its first profit in three quarters and settled more claims tied to faulty mortgages as an improving economy helped borrowers keep up with debts.

First-quarter earnings fell 36 percent to $2.05 billion, or 17 cents a share, from $3.18 billion, or 28 cents, a year earlier, the Charlotte, North Carolina-based lender said today in a statement.  
Chief Executive Officer Brian T. Moynihan, 51, has sought to assure investors that the bank is on the path to recovery after last year’s $2.2 billion net loss. Moynihan said in an interview the bank had about $3 billion of one-time costs in the first quarter and is cutting about 3,500 jobs tied to mortgage lending. The company also resolved claims with Assured Guaranty Ltd., the mortgage-bond insurer, for about $1.6 billion.
Revenue for the first quarter declined 16 percent to $27.1 billion. Results were aided by $2.2 billion released from reserves, a sign that the bank expects defaults by borrowers to ease in future quarters.

The bank’s mortgage unit posted a $2.4 billion loss, widening from $2.1 billion a year earlier. The deposits unit had a $355 million profit, down by almost half from a year earlier, on lower fees because of U.S. overdraft regulations. The cards unit reported a $1.7 billion profit, 78 percent higher from a year earlier as credit costs declined.

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