BofA's Moynihan sees 25% chance of double dip recession
In his speech today at the San Francisco Investor Conference, CEO of Bank of America (BAC), Brian Moynihan said he expects to see growth at his bank beat GDP projections as the risks of the economy sliding into a double dip recession decline. Moynihan said BofA will likely see growth in 2010 of 4.6%, and in 2011, 3.9%, while "our economists are forecasting a 2.6% growth rate in 2010, with a slower second half, and a 1.8% U.S. GDP growth rate in 2011. "We remain in a recovery… and that recovery looks likely to continue, albeit not with the strength or speed we all might like," he said. "The discussion now is whether we might have a so-called double dip recession – although our experts think the chance of that is low… we’re now putting the chances of a double-dip at around 25%." Moynihan took some time to dedicate a section of his speech to the performance of the mortgage portfolio at BofA. He said that while 22% of all of the bank's mortgage loans have negative equity, the majority of those are concentrated in the four Sand States. In 2009 BofA was the second-largest mortgage originator, behind Wells Fargo (WFC), with nearly 22% of market share ($391 billion). The rate of underwater mortgages is 32% in California, 48% in Florida, 62% in Nevada and 46% in Arizona. The average rate of underwater mortgages around the rest of the country is only 14%. The data "gives us some hope that the market is stabilizing across the country," said Moynihan. "We need to continue to focus on those localized affected areas." Bank of America plans to do this by putting increased emphasis on mortgage modifications. Since 2008, the bank has modified nearly 650,000 home loans. Mortgages modified under the Home Affordable Modification Program (HAMP) totaled 76,300 as of July. Write to Christine Ricciardi. The author held no relevant investments.