Bank of America reported its fiscal first quarter 2009 earnings today in a fraudulent sham and spectacle rigged to exaggerate profits while hiding losses. It was an old page torn from the remarkably thin play book called Masters Shaft the Universe. Once again, America’s decrepit financial sector has proved that it’s better to have weak competition than good business practices.
The bank reported that it earned $4.2 billion net income — or 44 cents per share after preferred dividends, including $402 million to the U.S. government — in Q1-2009. By earning more in the first quarter than in all of fiscal 2008, the bank sent the clear and false message that the worst of the credit crisis was past and it was safe to throw your money at Bank of America again. It was roughly the sort of thing that had always worked in days of credit bubbles past, but now a large public investor class shredded by the shock wave of the bubble burst would have none of it. They immediately seized upon the fact that the gains were nothing of substance or sustainability, and once it was laid bare, the balance sheet was simply bad.