Bank of America shares fell below $5 first time for the last 17 years

Bank of America shares fell 10.2%, to $4.75.for the second straight session for the first time since the mid 1980s. The last time that Bank of America shares closed at $4.75 was on January 30, 1985. Bank of America and Merrill Lynch ended 2008 with $2.49 trillion of assets as shares fall can lead to mounting losses on mortgages and corporate loans of the Charlotte, North Carolina, lender, or even the ouster of Chief Executive Kenneth Lewis.
Bank of America shares fell 60 cents and slipped as low as $4.62 during trading. The cost of protecting the bank's debt against default with credit default swaps rose 0.3 of a percentage point. 

But the bank's board supported solid Bank of America's business model last week in "the longest board meeting in anyone's memory”, according to the Charlotte Observer, Lewis. He has come under fire from shareholders as the once-lauded Merrill Lynch purchase has revealed, leaving Bank of America dependent on government support to battle mounting losses and shareholder value reduction.

Last month Bank of America posted its first quarterly loss in 17 years, and $15.31 billion quarterly loss was so much worse than expected that Lewis needed help from the government to complete the purcahase. The government, which had already given Bank of America $25 billion in October under the Troubled Asset Relief Program (TARP), agreed to inject $20 billion more, and to share in losses on $118 billion of residential and commercial mortgages, derivatives and corporate debt.

Source: Reuters