Posted on 10/24/2010 11:10:05 PM PDT by smokingfrog
I pity CEO Brian Moynihan and the 284,000 other employees of Bank of America Corp (BAC). That includes 15,000 Merrill Lynch brokers who are still recovering from the financial crisis and now have to explain to their clients why they work for a firm that is at the epicenter of America’s housing crisis. Not only have they seen $80 billion in stock market value evaporate since April but they also have to suffer the humiliation of having a parent company bone-headed enough to pay $4 billion for Countrywide, the financial firm created by subprime mortgage pimp Angelo Mozilo. That mess could wind up costing BAC $50 billion, excluding legal fees and brand value deterioration. Remember Countrywide originated $1.4 trillion in mortgages from 2005 to 2007 alone.
The latest ugly news for Bank of America is actually coming from Europe, where big institutional money managers and other mortgage securities buyers are now beginning to organize for an assault. This information comes from John Mauldin’s, Thoughts from the Frontline Weekly Newsletter. His e-letter is a must-read for many money managers and serious investors.
(Excerpt) Read more at blogs.forbes.com ...
Because Americans are bigger cowards than Europeans?
He would spill the beans on his enablers.
Aren’t these banks back doors connected to the US Treasury?
If people are interested, here’s Mauldin’s newsletter in .pdf format:
http://www.frontlinethoughts.com/pdf/mwo102310.pdf
And here’s the testimony to the FCIC that Mauldin refers:
http://fcic.gov/hearings/pdfs/2010-0407-Bowen.pdf
Mauldin is a great read...
They got Countrywide for $4B. That means a whole bunch of sub-prime mortgages were bought at a steeply discounted price. They will either collect on those mortgages or collect on the asset after foreclosure (and the foreclosures WILL be foreclosed on). Their total take on Countrywide will be far, far more than $4B when the dust settles, assuming the insiders (Goldman, certain “big” banks) aren’t able to push them down far enough for a takeover.
CC
I disagree. Yes, the $4B for Countrywide looked cheap at the time when they weighed the servicing revenues against the problems on the books. However, I believe that the problems on the books turned out to be worse than thought, and that there was no thought given to having to eat the losses on some of the securitizations that were “out the door” and thought to be off the books for ever.
thanx
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