Bank of America has incurred paper losses of nearly $109 billion due to heavy investments in U.S. government bonds, sources reported Tuesday.
The losses are a consequence of the bank’s capital allocation decision made when interest rates were low, and money liquidity was cheap.
Much like now-bankrupt SVB, Bank of America received large amounts of deposit inflows amounting to $670 billion during the Covid pandemic.
The bank used those deposits of purchase U.S. government bonds at historically high valuations and low yields, which have lost their luster.
