BofA Drags Balance Sheet Confidence Backward: Jonathan Weil

The more we learn about the mortgage industry’s documentation snafus, the more troubling hints we get that the financial statements of some of our biggest banks may be less reliable than anyone imagined.

Here’s the latest: Thanks to a Nov. 16 court ruling in Camden, New Jersey, we now know that a Bank of America Corp. employee, Linda DeMartini, testified last year that the lender routinely retained possession of mortgage promissory notes and related documents, even after loans were packaged into bonds that were sold to investors. If we’re to believe what she said, it raises the prospect that some of those loans still should be on Bank of America’s balance sheet today.