Mainstream Media Finally Recognizes Zombie Threat

An article on TIME magazine's Website currently poses the question: Is Bank of America a Zombie?

Well Money Morning Global Investment Strategist Martin Hutchinson told readers two years ago that it was.

And more recently, on June 13 of this year, Global Macro Trends Specialist Jack Barnes issued a "Sell" call on the company, citing its poor prospects. That was three months before the U.S. Federal Housing Finance Agency sued BofA and 16 other banks over the lousy mortgage securities these institutions created in the run-up to the financial crisis.

Both Hutchinson and Barnes have made a point to warn investors about the problems pervading the U.S. banking system.

"There was a time when bank stocks actually looked like good investments," Hutchinson said in an Aug. 17 article. "But sadly, U.S. banks no longer offer the value and profit-making potential they did immediately following the financial collapse. In fact, they're actually heading for what could be a catastrophic decline."

According to Hutchinson, traditional bank lending is no longer as profitable as it once was. The lengthy recession has dampened opportunities, and corporations are building large cash reserves, reducing their need for bank financing.

Meanwhile, trading profits are on the decline, regulation is expanding, and the housing market still hasn't hit bottom.

As a result, Bank of America recently announced that it would eliminate 30,000 positions in the next two and a half years and close as many as 750 branches.

And for those reasons we continue to insist investors steer clear of bank stocks.

Said Hutchinson: "In the "too-big-to-fail' era banks may get bailed out, but shareholders don't."

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