Mortgage Lender News: Bank of America, John Thain and Bankruptcy
Things just keep getting messier for Bank of America. Early last year, Bank of America was seen as a solid, financially sound, company that could swoop in and save failing financial institutions. Indeed, that is just what everyone thought had happened when Bank of America bought Countrywide last year. However, in hindsight, that looks like a poor decision.
Bank of America, it turns out, wasn’t as fundamentally sound as everyone thought. Subprime Blogger shares some of the woe that has befallen Bank of America since then:
Why would Bank of America purchase Countrywide Financial for $4.1 billion? On January 11th, 2008, the plan to purchase Countrywide was announced and the deal was finalized on July 1st, 2008. On January 11th, 2008 Bank of America was trading at $39.85 on the New York Stock Exchange. Since then, the stock has plummeted 85% to under $6!
The problems Bank of America faced after Countrywide have been further compounded by the acquisition of Merrill Lynch. Merrill has been seeing serious losses, and even after a nice, fat bailout, Bank of America is asking taxpayers for another $20 billion to aid in the merger. The Merrill Lynch saga is getting even more information after the resignation of Merrill chief John Thain. (A month ago, Thain asked for a $10 million bonus, and gave many of his employees a bonus just prior to the Bank of America closing.)
It is clear that nearly every financial services company in the U.S. has been touched by the financial crisis. The fact they brought it on themselves adds further to the bitter taste in the mouths of American taxpayers who are smarting as trillions are set aside to “rescue” the financial industry. Mortgage lenders and other money types are getting a very generous piece of the bailout pie (the lion’s share — the paltry amount set aside for the auto industry seems ludricrous to be upset about). However, the best that average Americans can hope for is a $500 (or maybe $1,000) tax break.
