Chris Whalen Says BofA (BAC) Should File For Bankruptcy or Government Will Take Over

Founder and managing director of Institutional Risk Analytics Chris Whalen believes Bank of America (NYSE: BAC) has no hope and should declare bankruptcy now.

Whalen's comments are not based on the company's financial standings and said BofA does not need to fire an expected 40,000 employees. Instead, Whalen bases his opinion on the bank’s mortgage and underwriting segment, saying the unit is in some real trouble.

Due to the litigation exposure from robo signing, he feels BofA will be forced to file for bankruptcy, which would then force the government to step in and restructure it. If the government steps in now - preventing a problem before it takes place - Bank of America may be able to save some face and continue to operate successfully as a smaller and restructured company.

If the bank wins two-thirds of the litigation it currently faces, it will still be in huge trouble. Whalen argues upper management is firing thousands of employees to save their own salaries and positions.

Mr. Whalen points to government intervention in General Motors (NYSE: GM), which in the end strengthened the company’s structure.

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