CNBC’s Jim Cramer looked into the settlement deal between Bank of America Corp (NYSE:BAC) and insurer American International Group Inc (NYSE:AIG) on Mad Money. On the settlement, Mr. Cramer remarked: “I thought it would cost billions. AIG wanted $10 billion. They got $650 million.”
He went on to say the settlement with American International Group Inc (NYSE:AIG) eliminates a huge headache for Bank of America Corp (NYSE:BAC) as the bank tries to put the past behind it. Therefore, of BAC he said “It removed a huge overhang, a lawsuit with AIG over crummy mortgages that Bank of America pumped out.”
Mr. Cramer believes that the latest settlement will not leave a big scare in Bank of America Corp (NYSE:BAC)’s finances. “Bank of America made so much money this quarter I’m no longer worried about how much is it’s going to have to pay the justice department to put it behind it,” he added.
Bank of America Corp (NYSE:BAC) reported a great second quarter that took Wall Street by surprise in that the company not only exceeded top and bottom line expectations, but also reported a rise in a division that was expected to register a fall – the trading division was up, yet analysts expected a drop. Bank of America Corp (NYSE:BAC) posted EPS of $0.41 on revenue of $21.75 billion, compared with the expected EPS of $0.29 on revenue of $21.6 billion.
By beating the second quarter results, the bank followed in the footsteps of its peer Citigroup Inc (NYSE:C), which also surprised the Street.
Regarding the incredible performance reported by Bank of America Corp (NYSE:BAC) for the second quarter, Mr. Cramer observed that the bank now has the money that it can also use to plead for the regulator’s favor in increasing its dividend payout and stock buyback.
Mr. Cramer not only touted Bank of America Corp (NYSE:BAC), but also said that as a bottom line in finding the next winners on the stock market, investors should look for buybacks, improving prospects and growth as a winning investment strategy.