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Bank of America is back to basics _ slimmed down, stripped of its swagger and no longer the biggest bank in the country. And investors, after pummeling the company for two years, finally like what they see.

The stock soared 4 percent Thursday after Bank of America reported that it made $2 billion from October through December, reversing a $1.2 billion loss from a year earlier. The stock is up 27 percent this year.

Almost none of the profit came from improvements in Bank of America’s basic businesses. In fact, it lost money in the fourth quarter in real estate and investment banking.

But the bank raised $2.9 billion by selling its stake in China Construction Bank and $2.4 billion more by selling debt and issuing common stock to replace its higher-cost preferred stock, which paid out annual dividends as high as 8 percent.

“We enter 2012 stronger and more efficient after two years of simplifying and streamlining our company,” CEO Brian Moynihan said.

The cash has strengthened Bank of America’s balance sheet, a key factor as it undergoes a Federal Reserve “stress test” and tries to meet international regulatory standards that demand banks hold more cash against risky loans.

“It would be a big step if Bank of America can prove to the Street it doesn’t need to raise additional capital,” said Shannon Stemm, a banking analyst Edward Jones, a financial advice company Edward Jones.

After the stock dropped 63 percent drop in 2010 and 2011, Bank of America is eager to start over. But it won’t be easy.

Paying $4 billion for Countrywide Financial Corp., the nation’s largest subprime mortgage lender, in 2008 seemed like a bargain but has cost Bank of America tens of billions in mortgage losses, fines and litigation.

“The biggest problem with Bank of America is that you never know what litigation expense lurks around the corner,” Stemm said.

The bank has also been forced to buy billions of dollars’ worth of mortgages from the government-sponsored mortgage financing companies Fannie Mae and Freddie Mac.

In 2011, the bank lost about $14 billion just on legal settlements tied to mortgages issued in years past. On Thursday, the bank said it put aside an additional $1.5 billion in the fourth quarter for future litigation, most of it tied to mortgages.

In addition to the legal costs, the Federal Reserve last year refused to let Bank of America increase its stock dividend, citing uncertainty about the depth of its mortgage problems Faxless payday loans.

It was the only denial issued to any of the four largest U.S. banks by the Fed, which is closely monitoring how the largest banks use their cash since the bailouts of 2008.

This year, Bank of America hasn’t asked the Fed to raise its dividend.

As the U.S. economy slowly comes back, investors are betting Bank of America is poised to capture some of that growth. But that won’t be easy, either.

Loans to people and businesses aren’t as profitable as they were before the financial crisis. Not only are interest rates at historic lows, but regulators have limited the fees banks can collect for overdrafts and late credit card payments. The government has also reduced the fees banks can ollect from stores on debit-card transactions.

Bank of America knows something about debit card fees. Last fall, it caused a public uproar when it announced it would charge customers $5 a month to use debit cards. The bank quickly backed off.

Bank of America serves about half of American households, and its results showed that housing continues remains a concern in the economy. The bank’s real estate business lost $1.5 billion after a 74 percent decline in new home loans. The bank lost some market share and closed a division that helped third-party home lenders.

But Americans seemed to be getting their financial houses in order by paying off more debt on time.

Bank of America, one of the largest credit card issuers, said customers who paid bills a month late declined for the 11th consecutive quarter. New credit card accounts also grew 53 percent, and the division posted a profit of $1 billion.

Bank of America’s investment banking business reported a loss of $433 million due to lower investment banking fees and lower sales and trading driven by the rocky stock and bond markets in the last three months of the year.

The bank’s quarterly earnings came to 15 cents per share, which was less than the 22 cents expected by analysts surveyed by FactSet, a provider of financial data. The earnings were in line with other estimates.

The bank reported fourth quarter revenue rose 11 percent to $25.1 billion from last year. For the year, the bank made $1.4 billion. It lost $2.2 billion in 2010.

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Federal Reserve Bank of St. Louis President James Bullard said the Fed probably won

Occupation • Owners of Ann’s Hat Boutique, North Euclid Avenue and Delmar Boulevard, Central West End

Ages • 82 (”It’s not until April, but I might as well claim it”) and 83

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Rupert Murdoch might be tweeting his billionaire media mogul thoughts to the world, but his wife, Wendi Deng, isn

The job market is healthier than at any time since the end of the Great Recession.

The number of people filing for unemployment benefits fell last week to the lowest since May 2008, a sign that the waves of corporate layoffs that have defined the past few years are all but over.

“This is unexpectedly great news,” said Ian Shepherdson, an economist at High Frequency Economics.

It will take an additional step _ robust hiring, not just the end of layoffs _ to bring the 8.6 percent unemployment rate down significantly. Experts say that won’t happen until businesses are more confident about customer demand. And the European debt crisis could still cause damage here.

But the report on unemployment claims Thursday was the latest to suggest that the economy, two and a half slow years after the official end of the recession, may finally be picking up momentum.

The nation added 100,000 or more jobs every month from July through November, the first such streak since 2006. And the economy, which was barely growing when the year started, has picked up speed each quarter.

More small businesses plan to hire than at any time in three years, a trade group said this week. And another private-sector survey found more companies are planning to add workers than at any time since 2008.

The number of people applying for unemployment benefits came in at 366,000, down from 385,000 the week before. Applications are nearing their pre-recession level of about 325,000.

The last time claims were so low, the nation was six months into the recession but didn’t know it yet. The unemployment rate was 5.4 percent _ a level almost hard to imagine these days. Unemployment has been above 8 percent for almost three years.

That spring of 2008, Bear Stearns, an investment house that predated the Depression, had been hobbled by its investment in subprime mortgages and was sold near collapse to JPMorgan Chase for a paltry $10 a share.

The worst was yet to come. Lehman Brothers collapsed four months later, credit froze, investors panicked and the stock market plunged. Businesses began slashing millions of jobs. Unemployment claims peaked at 659,000 in March 2009.

Unemployment claims are a measure of the pace of layoffs, and they have declined steadily for three months. Another government report this week showed that layoffs are lower than they were in most months before the recession.

But that’s just part of the picture. Business aren’t hiring with gusto. Unemployment fell 0.4 percentage points last month, but about half the decline was because people gave up looking for work and were no longer counted as unemployed payday loan lenders.

“One of the features of this recovery is that hiring is exceptionally weak,” said Jeremy Lawson, senior U.S. economist at BNP Paribas.

And that doesn’t necessarily show up in unemployment claims. Many employers cut staffs to the bone during the recession. If they worry that business will grow weakly next year, they may hold off on layoffs _ but not hire, either.

“The hiring numbers will continue to look good but not great,” said Nariman Behravesh, chief economist at IHS Global Insight.

Besides waiting for demand to come back, companies have other things to worry about. A recession in Europe would hurt U.S. exports, and a collapse in European banks because of the debt crisis there would probably cause a worldwide panic.

Another concern: The economy has been here before.

In February, unemployment claims fell to 375,000. Companies added about 200,000 jobs a month for three months. But then oil prices spiked and Europe’s debt problem got worse. Employers added just 53,000 jobs in May.

The decline in unemployment claims comes as Congress wrangles over whether to extend long-term unemployment benefits, which are set to expire at the end of this year.

Lawmakers differ over how long benefits should last. The House passed a Republican bill Tuesday that would renew emergency aid but reduce the maximum duration to 79 weeks from 99.

Democrats want to keep the full 99 weeks. The measure is part of broader legislation in the Democratic-led Senate that would also extend a cut in the Social Security tax and put $1,000 to $2,000 in most Americans’ pockets next year.

In other economic news Thursday:

_ The prices companies pay for factory and farm goods rose 0.3 percent last month. The figure was pushed up by higher food and pharmaceutical prices. But energy prices barely rose, keeping inflation in check. In the year ending in November, wholesale prices increased 5.7 percent, the Labor Department said. It’s the smallest increase since March.

_ A mixed picture emerged for manufacturing. Factory output fell in November for the first time in seven months, according to the Federal Reserve. Manufacturers made fewer cars, electronics and appliances. But some economists noted that auto sales rose in November, suggesting that production will rebound. And the Federal Reserve Banks of Philadelphia and New York said manufacturing expanded in their regions. Manufacturing has been a key source of economic growth this year.

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In his annual report tabled last week, Auditor General Jim McCarter accused the Ontario government of mismanaging the prices of auto insurance, electricity and liquor.

If his findings had been available for scrutiny before the Oct. 6 election, Ontario voters might have given even fewer seats to the Liberal party, which ended up with a one-seat minority.

I wish the Opposition parties were as comprehensive in their criticism as McCarter was. They had an opportunity to attack the government on pocketbook issues and came up short.

Here are some numbers that tell the story from a mammoth 462-page report, available online at www.auditor.on.ca.

Auto insurance: The Financial Services Commission of Ontario (FSCO) approves rate filings by insurers and protects consumers from being charged an incorrect rate.

In a five-year period, FSCO reviewed 22 complaints about incorrect rates — and only five of them were initiated by the public. (The rest were self-reported by insurers.)

“Such errors can have a significant impact on consumers — we noted examples of overbilling that totalled between $1 million to $11 million,” the auditor’s report says.

“However, FSCO did not have any procedures for periodically checking that insurers were charging the approved rates.”

The agency said it planned to verify that insurers were charging only authorized rates. But why didn’t it do so earlier? It’s been approving insurance rates for several decades.

Electricity: The Ontario Energy Board has a responsibility to educate consumers on how to understand their complex electricity bills.

They need to understand the risks and potential benefits of signing retail fixed-price contracts. They need to know about the time-of-use system and how they can save by adjusting power usage.

But in a 2010 focus group, many people said they couldn’t figure out the electricity charges on their bills and weren’t aware of the board’s role in protecting them.

Meanwhile, the board received 17,000 complaints in five years. Most were about electricity retailers misrepresenting themselves, switching supply without a contract, even forging signatures on contracts.

Since it licenses retailers, the board is expected to play a proactive role in protecting consumers from unfair business practices.

“Despite the high number of public complaints, we noted little enforcement action against retailers with repeated offences. Since July 2003, the board has issued only four enforcement orders in 2009 and just one in 2010,” the report said.

Right on, Jim McCarter. Why has so little been done to discipline the brazen door-to-door sellers who break all the rules? This has gone on for a decade.

Liquor: The Liquor Control Board of Ontario can set retail prices for the products it sells. In the latest fiscal year, it had sales of $4.6 billion and net income of $1.56 billion (virtually all the profit goes to the province).

Most large retailers use their buying power to negotiate with suppliers to drive down costs. But the LCBO, one of the world’s largest purchasers of beverage alcohol, doesn’t do so.

It has no incentive to negotiate lower wholesale costs — since that would result in lower prices and, in turn, lower profits for the province.

“The LCBO should assess the feasibility of negotiating as low a price as possible with its suppliers,” McCarter said after releasing the report.

“With retail prices still kept at desired levels, this could result in higher profits for the province while still encouraging responsible consumption.”

Let’s be grateful that the auditor is doing his job and telling the truth. Ontario consumers pay too much for basic services and get too little from government agencies that are supposed to protect their interests.

Let’s hope his efforts continue to bear fruit in the years to come.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca.

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The Occupy Wall Street movement has close to $300,000, as well as storage space loaded with donated supplies in lower Manhattan. It stared down city officials to hang on to its makeshift headquarters, showed its muscle Saturday with a big Times Square demonstration and found legions of activists demonstrating in solidarity across the country and around the world.

Could this be the peak for loosely organized protesters, united less by a common cause than by revulsion to what they consider unbridled corporate greed? Or are they just getting started?

There are signs of confidence, but also signs of tension among the demonstrators at Zuccotti Park, the epicenter of the movement that began a month ago Monday. They have trouble agreeing on things like whether someone can bring in a sleeping bag, and show little sign of uniting on any policy issues. Some protesters eventually want the movement to rally around a goal, while others insist that isn’t the point.

“We’re moving fast, without a hierarchical structure and lots of gears turning,” said Justin Strekal, a college student and political organizer who traveled from Cleveland to New York to help. “… Egos are clashing, but this is participatory democracy in a little park.”

Even if the protesters were barred from camping in Zuccotti Park, as the property owner and the city briefly threatened to do last week, the movement would continue, Strekal said. He said activists were working with legal experts to identify alternate sites where the risk of getting kicked out would be relatively low.

Wall Street protesters are intent on hanging on to the momentum they gained from Saturday’s worldwide demonstrations, which drew hundreds of thousands of people, mostly in the U.S. and Europe. They’re filling a cavernous space a block from Wall Street with donated goods to help sustain their nearly month-long occupation of a private park nearby.

They’ve amassed mounds of blankets, pillows, sleeping bags, cans of food, medical and hygienic supplies _ even oddities like a box of knitting wool and 20 pairs of swimming goggles (to shield protesters from pepper-spray attacks). Supporters are shipping about 300 boxes a day, Strekal said.

The space was donated by the United Federation of Teachers, which has offices in the building.

Close to $300,000 in cash also has been donated, through the movement’s website and by people who give money in person at the park, said Bill Dobbs, a press liaison for the movement. The movement has an account at Amalgamated Bank, which bills itself as “the only 100 percent union-owned bank in the United States.”

Strekal said the donated goods are being stored “for a long-term occupation.”

“We are unstoppable! Another world is possible!” Kara Segal and other volunteers chanted in the building lobby as they arrived to help unpack and sort items, preparing them to be rolled out to the park.

While on the streets, moments of madness occasionally erupt in the protest crowd _ accompanied by whiffs of marijuana, grungy clothing and disarray _ order prevails at the storage site.

It doubles as a sort of Occupy Wall Street central command post, with strategic meetings that are separate from the “general assembly” free-for-alls in the park. One subject Sunday was data entry: protesters are working to get the names and addresses of donors into a databank.

The movement has become an issue in the Republican presidential primary race and beyond, with politicians from both parties under pressure to weigh in.

President Barack Obama referred to the protests at Sunday’s dedication of a monument for Martin Luther King Jr., saying the civil rights leader “would want us to challenge the excesses of Wall Street without demonizing those who work there.”

Many of the largest of Saturday’s protests were in Europe, where protesters involved in long-running demonstrations against austerity measures declared common cause with the Occupy Wall Street movement. In Rome, hundreds of rioters infiltrated a march by tens of thousands of demonstrators, causing what the mayor estimated was at least euro1 million ($1.4 million) in damage to city property.

U.S. cities large and small were “occupied” over the weekend: Washington, D.C., Fairbanks, Alaska, Burlington, Vt., Rapid City, S.D., and Cheyenne, Wyo. were just a few. In Cincinnati, protesters moved their demonstration out of a park after hearing that a couple was getting their wedding photos taken there _ but the bride and groom ended up seeking them out for pictures.

More than 70 New York protesters were arrested Saturday, more than 40 of them in Times Square. About 175 people were arrested in Chicago after they refused to leave a park where they were camped late Saturday, and there were about 100 arrests in Arizona _ 53 in Tucson and 46 in Phoenix _ after protesters refused police orders to disperse. About two dozen people were arrested in Denver, and in Sacramento, Calif., anti-war activist Cindy Sheehan was among about 20 people arrested after failing to follow police orders to disperse.

Activists around the country said they felt that Saturday’s protests energized their movement.

“It’s an upward trajectory,” said John St. Lawrence, a Florida real estate lawyer who took part in Saturday’s Occupy Orlando protest, which drew more than 1,500 people. “It’s catching people’s imagination and also, knock on wood, nothing sort of negative or discrediting has happened.”

St. Lawrence is among those unconcerned that the movement has not rallied around any particular proposal, saying “policy is for leaders to come up with.”

“I don’t think the underlying theme is a mystery,” he said. “We saw what the banks and financial institutions did to the economy. We bailed them out. And then they went about evicting people from their homes,” he said. He added that although he is not in debt and owns his own home, other people in his neighborhood are suffering and “everyone’s interests are interconnected.”

In Richmond, Va., about 75 people gathered Sunday for one of the “general assembly” meetings that are a key part of the movement’s consensus-building process. Protester Whitney Whiting, a video editor, said the process has helped “gather voices” about Americans discontent, and that she expects it will eventually take the movement a step further.

“In regards to a singular issue or a singular focus, I think that will come eventually. But right now we have to set up a space for that to happen,” Whiting said.

Some U.S. protesters, like those in Europe, have their own causes. Unions that have joined forces with the movement have demands of their own, and on Sunday members of the newly formed Occupy Pittsburgh group demanded that Bank of New York Mellon Corp. pay back money they allege it overcharged public pension funds around the country.

New York’s attorney general and New York City sued BNY Mellon this month, accusing it of defrauding clients in foreign currency exchange transactions that generated nearly $2 billion over 10 years. The company has vowed to fight the lawsuit and had no comment about the protesters’ allegation about pensions.

Lisa Deaton, a tea party leader from southern Indiana, said she sees some similarities between how the tea party movement and the Wall Street protests began: “We got up and we wanted to vent.”

But the critical step, she said, was taking that emotion and focusing it toward changing government.

The first rally she organized drew more than 2,500 people, but afterward, “it was like, `What do we do?’” she said. “You can’t have a concert every weekend.”

The Wall Street protesters’ lack of leadership and focus on consensus-building has help bring together people with different perspectives, but it’s also created some tension.

“Issues are arising _ like who is bringing in sleeping bags without permission,” said Laurie Dobson, who’s been helping a self-governed “working group” called “SIS” _ for Shipping, Inventory and Supplies.

Sleeping bags were among items cited by Zuccotti Park’s owner, Brookfield Properties, as not allowed on the premises _ along with tents, tarps and other essentials for the encampment. By Sunday, all those items were back.

Strekal didn’t see that as a problem. Protesters could do it, he said, “because we’re winning the PR war.”

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China’s manufacturing remained stagnant in September due to sluggish demand both at home and abroad, according to a survey released Friday.

The monthly survey by HSBC released Friday also showed prices for materials and other manufacturing inputs rising at the fastest pace in four months _ suggesting sustained inflationary pressures.

The full survey followed a more pessimistic preliminary version published last week that prompted a sell-off in global markets as investors reacted to the possibility that China’s robust growth might falter, further dimming the world economic outlook.

HSBC said its purchasing managers index for September was steady at 49.9 on a 100-point scale on which numbers below 50 show activity contracting. The preliminary reading was 49.4.

The index, which showed its lowest quarterly average since early 2009, suggests a “negligible rate of deterioration in manufacturing sector operating conditions,” HSBC said.

Chinese industrial production has slowed following repeated interest rate hikes and other curbs as the government tries to tame growth and cool inflation that is hovering near a three-year high of over 6 percent.

The lack of change “shows some signs of stabilizing,” said HSBC economist Hongbin Qu. “This implies that although the lagged effects of credit tightening will continue to cool industrial activity in the months ahead, there is little need to worry about a sharp slowdown.”

The HSBC survey was released a day early due to an upcoming weeklong national holiday. A similar government-sponsored survey may be issued as usual on the first of the month.

The HSBC survey noted a negligible increase in manufacturing output and a marginal decline in new orders. New export business also fell at a negligible rate, it said.

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An early rally is fading on Wall Street as traders worry about Europe’s ability to contain its debt crisis.

German Chancellor Angela Merkel suggested that the second Greek bailout package might have to be renegotiated. European leaders want banks to take bigger losses on Greek bonds. News reports indicate that France and the European Central Bank oppose the idea.

Technology companies rose after Amazon.com announced a new tablet computer and Microsoft said it was expanding a smartphone partnership with Samsung.

The Dow Jones industrial average rose 65 points, or 0.6 percent, to 11,257 shortly before noon Wednesday. It had been up as many as 126 points earlier.

The Standard & Poor’s 500 rose 2, or 0.2 percent, to 1,178. The Nasdaq composite fell 2, or 0.1 percent, to 2,545.

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