Initially, I considered calling this commentary 'The Straw That May Break The Camel's Back' or even 'The U.S. Markets - Are They Self-Destructing?', but elected to not fall into the 'sensationalist headlines' trap that I frequently criticize.

Yesterday, I read an article titled 'Here's Why Bank Of America's Stock Is Collapsing Again - reading time 4 minutes, thinking time much longer.

This article comments on the continuing drop on Monday of the Bank of America common share price, and the views of market observers as to the credibility (or lack thereof) of Bank of America's underlying (accounting) book equity. Interestingly, later yesterday a second article appeared by the same author on the same subject. The title of this second article was 'Oh My Goodness: Now Bank Of America Is Blaming Its Collapsing Stock on ME http://www.businessinsider.com/bank-of-america-henry-blodget-2011-8 ' - reading time 3 minutes.

In my view, anyone owning bank stocks in any world equity market ought to consider reading both pieces. To extend that, I think that anyone owning any stocks in any market ought to read both articles if they believe 'the stuff' I have been writing for over two years now on the changes in the accounting 'mark-to-market' rules, and believe that the performance of bank stocks are important to overall equities markets performance.

The first article attributes comments made by market observers who apparently have expressed views that the Bank of America's underlying (accounting) U.S.$222 billion book equity is overstated. These 'market observers' variously are said to attribute said 'overstatement' to (1) possible inadequate mortgage-litigation reserves, (2) possible overstated 'second mortgage' holdings, (3)possible overstated commercial real estate loan holdings, (4) possible overstated 'acquisition goodwill', and (5) possible undetermined exposure to European bank and sovereign debt.

If you read the article you will find these are all 'very soft suggested and un-quantified exposure guesses', and that none of them specifically addresses book equity overstatements that may have arisen from changes in the mark-to-market rules. That said, the fact that the first article has been written at all brings into focus my ongoing concerns with respect to all commercial bank (accounting) book equities after 2008.

The second article references reports that Bank of America has said (on reading the first article) that the claims of its (accounting) book equity overstatement referenced in the first article are 'exaggerated and unwarranted'. I suggest you read that second article as well. I find it interesting that Bank of America would deign to comment.

I suggest anyone owning equities generally, and U.S. and European Bank equities in particular, regularly monitor the share price performance of Bank of America going forward, along with subsequent reported reasons for its share price performance, be it up or down.

Bank of America common shares closed down $0.12 yesterday to a 52 month low of $6.30, while yesterday the Dow and S&P went up 322 points (2.97%) and 39 points (3.43%) respectively.