Mass Home Refinancing Rumor Rejected, And Why Even If It Was True It Would Not Help BAC

Looking for a reason why the surge of BAC has been abruptly halted after hours? Look no further - as predicted earlier, when we commented on the periodic reincarnation of the always false global refi rumor which served among other things to push BAC higher by almost 10%, the rumor was found to be false... all over again. In other words no refi, no benefit to TBTF, and all of today's gains are based on what Bloomberg noted was a report issued yesterday by a Jaret Seiberg, who until recently was an employee of MF Global, and has since been acquired with his entire Washington Research Group by none other than Guggenheim partners, which just happens to be run by former Bear Stearns exec Alan Scwhartz. From Bloomberg, here is the official denial (which came literally seconds after market close):

White House Has No Plan for Mass Home Refinancing, Person Says
Incidentally, even if the rumor was true, here is JMP explaining why it would have no real impact on Bank of America

Bank of America (BAC, $6.28, Market Perform): Market Overly Optimistic About the Impact of a Hypothetical $1 Tril. Refinance Program, in Our View

Shares of BAC were up 8% today as rumors swirled that President Obama may enact a $1 trillion refinance program. Granted, BAC shares were trading at a big discount to book (0.4x), and the investment community--now with several months of runway--seems to be going "risk on". But the big upward move on this news seems more a grasp for "validation", and we don't believe it will stick.

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