Bank of America's Accounting Blunder Brings No Bother to Buffett

Saturday, 03 May 2014 05:48 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

Warren Buffett, who made a $5 billion investment in Bank of America Corp., said he’s confident the lender will overcome an accounting mistake that forced the firm to suspend its capital plan this week.

“That error they made does not bother me,” Buffett said. “You do the best you can.”

Bank of America halted a planned dividend increase and $4 billion of share repurchases on April 28 after finding the mistake in a stress-test submission to the Federal Reserve. The Charlotte, North Carolina-based bank’s error, which had gone undetected since 2009, didn’t affect earnings.

“It doesn’t change my feeling about Bank of America or its management,” Buffett said at Berkshire’s annual meeting in Omaha, Nebraska.

Buffett’s Berkshire Hathaway Inc. made the $5 billion investment in Bank of America in 2011, receiving preferred stock and warrants to buy 700 million shares for $7.14 apiece. That effectively makes the bank Berkshire’s fifth-largest equity position, “and one we value highly,” Buffett wrote in his annual letter to shareholders.

The bank, the No. 2 U.S. lender by assets, said its revised submission to the Fed will probably mean lower payouts, without giving the figures.

Buffett’s paper profit on the Bank of America warrants stands at about $5.7 billion. The lender slumped 6.3 percent after the disclosure about the botched accounting, erasing its gain for the year. The firm led by Chief Executive Officer Brian T. Moynihan ended the week at $15.25, 2.1 percent lower than the close on Dec. 31.

© Copyright 2014 Bloomberg News. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved