Tomahawk, WI 10/01/2013 (BasicsMedia) – Latest reports from Wall Street offer the indication that analysts are still not optimistic about the future of Bank of America Corp (NYSE:BAC). It has been ages since the bank was in the news for the right reasons. The bank is always on the news for not-so-good reasons. But this is not the reason why analysts are downgrading this stock. The question here then is; what has happened since the last time Wall Street analysts issued their last BAC rating? What has gone on to make these analysts be of the opinion that BAC’s future prospects are not that pleasant after all?

 Reasons for BAC’s Downgrading

 The three main reasons why analysts would usually downgrade a stock, include the presence of changes which are considered to be material and quite fundamental; and the changes in the company’s operations; as well as changes in the industry’s outlook. Overall, the banking sector in the U.S is not in the state it was in immediately after the financial crisis of 2008. A number of these large banks, such as BAC, JP Morgan Chase & Co as well as Citigroup have succeeded in turning their fortunes around. I can’t see a negative fundamental change which affects them all.

 Now, if there isn’t something massive which has occurred in the banking sector in the U.S or elsewhere in the world to negate BAC’s future prospects, what has happened? I think it all boils down to BAC’s operations. When a stock such as BAC is downgraded, it means that analyst no longer consider it to be attractive. BAC has been unattractive for quite an extended period of time. The company has also moved from one crisis after the other during this time. Currently, it is being accused of having played a crucial role in fraud related to the U.S mortgages industry.

BAC Accused of Fraud

 It is these charges regarding BAC’s role in promoting fraudulent activities in the U.S mortgage industry which has probably convinced analysts that it is not still attractive. Every time a company has to face charges instituted by the Securities and Exchange Commission, its stock will suffer negative publicity and downgrading it seems the natural path to take. This is presumably what has happened with BAC. The bank is being accused of defrauding Fannie Mae and Freddie Mac, which are government agencies tasked with underwriting mortgages.

 These new accusations leveled against BAC are bound to continue messing its stock up. After the financial crisis of 2008, the large banks in the U.S. and which are of BAC’s caliber, had to go through a time of winning back the confidence of the public. Some of them are on the verge of achieving success with their plans. However, others such as BAC appear to be struggling to win back the confidence of both the public and investors. The latter are yet to be totally convinced of BAC’s attractiveness as a stock. The public reads such news on BAC and they get worried.

 BAC has its work cut out for it. It has been downgraded, and although this rating can change within a short moment, the company still needs to do a lot in order to convince the public and investors that it is ready for business once more, and is an attractive investment.

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