Bank of America 2011 Annual Report Download - page 21

Bank of America 2011 19
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
This report, the documents that it incorporates by reference and
the documents into which it may be incorporated by reference may
contain, and from time to time Bank of America Corporation
(collectively with its subsidiaries, the Corporation) and its
management may make certain statements that constitute forward-
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements can be identified
by the fact that they do not relate strictly to historical or current
facts. Forward-looking statements often use words such as
“expects,” “anticipates,” “believes,” “estimates,” “targets,” “intends,”
“plans,” “goal” and other similar expressions or future or conditional
verbs such as “will,” “may,” “might,” “should,” “would” and “could.” The
forward-looking statements made represent the current
expectations, plans or forecasts of the Corporation regarding the
Corporation’s future results and revenues, and future business and
economic conditions more generally, including statements
concerning: the potential impacts of the European Union sovereign
debt crisis; the impact of the U.K. 2011 Finance Bill and review by
the U.K. Financial Services Authority; the charge to income for each
one percent reduction in the U.K. corporate income tax rate; the
agreements in principle with the state attorneys general and U.S.
Department of Justice are expected to result in programs that would
extend additional relief to homeowners and make refinancing
options available to more homeowners; the programs expected to
be developed pursuant to the agreements in principle, including
expanded mortgage modification solutions such as broader use of
principal reduction, short sales and other additional assistance
programs, expanded refinancing opportunities, the amount of our
commitments under the agreements in principle, as well as
expectations that further details about eligibility and
implementation will be provided; that the financial impact of the
settlements is not expected to cause any additional reserves over
existing accruals as of December 31, 2011 based on our
understanding of the terms of the agreements in principle, as well
as the expected impact of refinancing assistance and operating
costs; that certain amounts may be reduced by credits earned for
principal reductions; that our payment obligations under
agreements in principle with the Board of Governors of the Federal
Reserve System (Federal Reserve) and the Office of the Comptroller
of the Currency would be deemed satisfied by payments and
provisions of relief under the agreements in principle; the
expectation that government entities will provide releases from
further liability and the exclusions from the releases; expectations
regarding reaching final agreements, obtaining necessary
regulatory and court approvals and finalization of the settlements;
the planned schedule and details for implementation and
completion of, and the expected impact from, Phase 1 and Phase
2 of Project New BAC, including expected personnel reductions and
estimated cost savings; the impact of and costs associated with
each of the agreements with the Bank of New York Mellon (as trustee
for certain legacy Countrywide Financial Corporation (Countrywide)
private-label securitization trusts), and each of the government-
sponsored enterprises, Fannie Mae (FNMA) and Freddie Mac
(collectively, the GSEs), to resolve bulk representations and
warranties claims; our expectation that the $1.7 billion in claims
from private-label securitization investors in the covered trusts under
the private-label securitization settlement with the Bank of New York
Mellon (the BNY Mellon Settlement) would be extinguished upon
final court approval of the BNY Mellon Settlement; the belief that
the provisions recorded in connection with the BNY Mellon
Settlement and the additional non-GSE representations and
warranties provisions recorded in 2011 have provided for a
substantial portion of the Corporation’s non-GSE repurchase claims;
the estimated range of possible loss for non-GSE representations
and warranties exposure as of December 31, 2011 of up to $5
billion over existing accruals and the effect of adverse developments
with respect to one or more of the assumptions underlying the
liability for non-GSE representations and warranties and the
corresponding estimated range of possible loss; the continually
evolving behavior of the GSEs, and the Corporation’s intention to
monitor and repurchase loans to the extent required under the
contracts and standards that govern our relationships with the GSEs
and update its processes related to these changing GSE behaviors;
our expressed intention not to pay compensatory fees under the
new GSE servicing guides; the adequacy of the liability for the
remaining representations and warranties exposure to the GSEs
and the future impact to earnings, including the impact on such
estimated liability arising from the announcement by FNMA
regarding mortgage rescissions, cancellations and claim denials;
our beliefs regarding our ability to resolve rescissions before the
expiration of the appeal period allowed by FNMA; our expectation
that mortgage-related assessments and waivers costs and costs
related to resources necessary to perform the foreclosure process
assessments will remain elevated as additional loans are delayed
in the foreclosure process; the expected repurchase claims on the
2004-2008 loan vintages, including the belief regarding reduced
exposure related to loans originated after 2008; the Corporation’s
intention to vigorously contest any requests for repurchase for which
it concludes that a valid basis does not exist; future impact of
complying with the terms of the consent orders with federal bank
regulators regarding the foreclosure process; the impact of delays
in connection with the Corporation’s temporary halt of foreclosure
proceedings in late 2010; continued cooperation with investigations;
the potential materiality of liability with respect to potential servicing-
related claims; our estimates regarding the percentages of loans
expected to prepay, default or reset in 2012 and thereafter; the net
recovery projections for credit default swaps with monoline financial
guarantors; the impact on economic conditions and on the
Corporation arising from any further changes to the credit rating or
perceived creditworthiness of instruments issued, insured or
guaranteed by the U.S. government, or of institutions, agencies or
instrumentalities directly linked to the U.S. government; the
realizability of deferred tax assets prior to expiration of any
carryforward periods; credit trends and conditions, including credit
losses, credit reserves, the allowance for credit losses, the allowance
for loan and lease losses, charge-offs, delinquency, collection and
bankruptcy trends, and nonperforming asset levels, including
continued expected reductions in the allowance for loan and lease
losses in 2012; the role of non-core asset sales in our capital
strategy; investment banking fees; sales and trading revenue;
consumer and commercial service charges, including the impact of
changes in the Corporation’s overdraft policy and the Corporation’s
ability to mitigate a decline in revenues; the effects of new
accounting pronouncements; capital levels determined by or
established in accordance with accounting principles generally
accepted in the United States of America and with the requirements