Business

Bank of America Plagued by Financial Woes

Jan. 11, 2008: an important date for any American concerned about the federal government’s bailout of the banks under the Troubled Asset Relief Program (TARP). Jan. 11 was the day that Bank of America (BofA), the recipient of literarily billions of dollars in bailout money (which they have repaid), acquired Countrywide Financial. The purchase was originally expected to cost them $4 billion, entirely in stock, and was supposed to cement their position as the nation’s top mortgage lender.

Bank of America Plagued by Financial Nightmares

Bank of America CEO Brian Moynihan

Reuters recalculated the $4 billion estimate and discovered that buying Countrywide Financial would only cost the banking giant around $2.5 billion. Upon even further scrutiny, it was discovered that, technically, the deal would cost them even less than that, because the purchase really represented an increase in their investment in the faltering California lender of about $2 billion.

However, as almost everyone knows, the deal did not turn out so well for Bank of America. The purchase was a disaster and ended up being one of the many things that cost American taxpayers billions in efforts to “correct.”

According to Business Insider, Countrywide’s CEO Angelo Mozilo was later charged with fraud (in which he settled) because his company, the largest mortgage lender, underwrote so many of the toxic subprime loans that caused the financial crisis, and he allegedly was aware of it all along.

Now the unlucky owner of Countrywide, Bank of America, is in the process of trying to settle lawsuits from investors in those subprime loans, and they are being met with numerous obstacles. Blaze readers may recall that among one of the numerous issues hammering away at BofA is the fact that they are being sued by AIG.

Furthermore, dozens of investors and the New York AG have objected to an $8.5 billion settlement that would relieve BofA of its legal liability and cast the blame on Countrywide instead. The investor’s refusal to agree to this $8.5 billion settlement translates literally: “Expensive lawsuits are coming your way and they will not be letting up anytime soon, Bank of America.”

Brian Moynihan, the CEO of Bank of America, recently said on a conference call with investors, “Obviously, there aren’t many days when I get up and think positively about the Countrywide transaction in 2008.”

Bottom line: What was supposed to be a $2 billion purchase has mutated into a financial nightmare that is costing them nearly 15 times the original price. Writedowns and legal fees have pushed the estimated cost of the Countrywide purchase to more than $30 billion.

Business Insider once jokingly said that Moynihan must go to bed cursing the name Mozilo.

Is that perhaps letting him off too easy?

Comments (58)

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  • Bill Wallace
    Posted on September 1, 2011 at 2:21pm

    As if that is BofA’s only issue. They recently settled a class action lawsuit for how their computer program settled overdrafts to generate the highest charges against their clients.

    Moynihan needs to go to jail.

    Report Post »  
    • FAITH HOPE LOVE
      Posted on September 1, 2011 at 5:24pm

      They did settle? Guess I didnt get any money because I was included too. It was wrong when they did it and I argued w/them about that exact policy and they refused to “forgive” any of my wrongfully charged fees.

      Report Post »  
    • chexfive
      Posted on September 4, 2011 at 2:19pm

      I know this is sorta off the given subject, but I noticed when Glenn and company was talking about BofA, and the banks being gangsters and bad, they never brought up the fact that Bank of America laundered $350 BILLION for the mexican drug cartels (search fox news for details) and they knew it was drug money all along.

      Now, if this were you or I, all of our possessions would be confiscated immediately, we would be on immediate federal probation, we would be immediately locked up and intimidated, harassed and threatened by the DEA, Customs, or Federal officers. But what happened to B of A? they got a little measly fine, which amounts to telling the bankers, it ok to make billions off the drugs, keep doing it. Nobody has went to jail, no property confiscated for using a dwelling to maintain a criminal enterprise, nothing. The federal gov even gave these drug cartels weapons in Fast a Furious, and also gave protection of the drugs to enter the USA.

      Now, the gov claims we have a program called the war on drugs, so which is it?

      I say they must have the war on drugs they don’t make money on, because the gov has clearly been outed as a drug runner themselves. The gov brings in the dope, makes the profits and then locks up 20 year olds for having a few joints, this is the height of hypocrisy and criminality.

      Maybe someone should tell Glenn and his cohorts about these news releases. I noticed when these stories broke, The Blaze didn’t run them. Why not, are were well do

      Report Post » chexfive  
    • chexfive
      Posted on September 4, 2011 at 9:26pm

      Do post get lost often around here?

      Report Post » chexfive  
    • chexfive
      Posted on September 4, 2011 at 9:27pm

      Hahahaha

      Report Post » chexfive  
  • Tom70
    Posted on September 1, 2011 at 1:33pm

    That’s alright the Bamster will fix it all up so his buddy Buffet can make a ton of money and give some of to his re-election campaign. Who says dirty politics don’t pay.

    Report Post »  
  • goldcntry
    Posted on September 1, 2011 at 11:55am

    As a consumer who had a non-toxic mortgage through Countrywide and then ended up losing the house thanks in part due to BofA’s absolute refusal to work with us or our realtor in trying to sell a house in the abysmal California housing market, I have ZERO sympathy for them. At least Countrywide actually had a little something called customer service.

    Report Post » goldcntry  
  • sjohn70037
    Posted on September 1, 2011 at 11:29am

    BOA sucks. Did you see the story about the couple that foreclosed on a BOA bank because the BOA bank attempted to foreclose on the couples’ house? BOA didn’t own the loan on the house!?!?!

    Report Post » sjohn70037  
  • Mil-Dot
    Posted on September 1, 2011 at 11:14am

    Looks like the Huffpo chick and her censor goons are alive and well at the Blaze. Thanks Glen.

    Report Post »  
  • green_manalishi
    Posted on September 1, 2011 at 11:03am

    Bank ofAmerica needs to go away, they should never have started to cash illegal alien paychecks , and turned around and screwed Americans

    Report Post »  
    • Liberty41
      Posted on September 2, 2011 at 6:07pm

      I agree, my wife wasted 35 years working for the now BOA, you
      should hear some of the secret things she said that takes place
      at BOA.

      For us, we hope to see BOA go down in FLAMES, SOON!!!

      Report Post »  
  • Gypsy123
    Posted on September 1, 2011 at 10:02am

    They are not very reputable that is why

    Report Post » Gypsy123  
  • boca_chica
    Posted on September 1, 2011 at 9:58am

    I remember when, back in the 80′s the government “asked ” the U.S. banks to loan to South American countries and they had revolutions and defaulted on their loans-same old story-the government “tells” the people to do something and they do it and loose money.

    Report Post »  
  • ...EriK
    Posted on September 1, 2011 at 8:57am

    Back around ‘05 two of my colleagues (Six Sigma Gurus) where engaged by Countryside to evaluate there mortgage loan process for potential re-engineering. They came back and reported that they had never seen anything so absolutely screwed up as Countryside’s loan process, and our guys had decades of experience in the banking business. After their report our company “ran” from doing business with them.

    Report Post » ...EriK  
  • hempstead1944
    Posted on September 1, 2011 at 8:10am

    BoF is simply a bigger bunch of crooks than Citigroup or Chase……same DNA.

    Report Post »  
    • americansfightingforcommonsense
      Posted on September 1, 2011 at 8:23am

      In April of 2011 we suffered $41,000 in damage to our home via a hail storm. American Family Insurance paid us the funds in order to do the repairs, but under federal law after Hurricane Katrina, the check had to endorsed and mailed to Bank Of America Claims Dept. We have had all the work done to repair our home, but BOA refuses to pay our General Contractor any money as of yet. I have spent 100′s of hours calling BOA and FAXING every possible item that they requested. They have continued to LIE and MAKE UP new and inventive reasons of why they can’t send the money. I made the mistake of paying to a few contractors some of my own money after being promised by BOA that they would refund that money to me. That pushed my finances to the brink and pushed over the edge towards foreclosure. I am now current with my home loan, but they still have not released any funds as of yet. Promises, Promises, do not believe their promises. They LIE. I would not recommend BOA to anyone.

      Report Post » americansfightingforcommonsense  
    • Bum thrower
      Posted on September 1, 2011 at 8:56am

      You got that right; I took ALL of my money out of BOA; they are up to their keister in the Greek financial crisis. I own some BOA stock that i got way back when; it is now my emergency TP….Trouble is if they go under, the Government is broke and can’t bail US the account holders out.

      They own more foreclosed property than you can imagine; I went thru one SD and saw 4 properties that were taken back by BOA last Year!! hadn’t even been cleaned up; you could flush wild birds out of the lawn and couldn’t even get into the back yard…..more democrat cronie capitolism….

      Report Post »  
  • texascav
    Posted on September 1, 2011 at 8:07am

    Bailout coming…………

    Report Post » texascav  
  • the point
    Posted on September 1, 2011 at 7:56am

    They started out sa NCNB. Then it was BankAmerica. Now it is Bank of America
    With this many aliases, they are bound to be doing something that they shouldn’t be doing.

    Report Post »  
  • Katydidnt
    Posted on September 1, 2011 at 6:13am

    Bank of America and Countrywide were absolutely horrible. They “lost” 17 months of mortgage payments my brother-in-law made. He had the canceled checks, but they said, they didn’t have record of them. He was supposed to find out where the money went!?! The penalties and interest were horrible and of course he couldn’t refinance with that record. He ended up losing the house.

    Report Post »  
    • Katydidnt
      Posted on September 1, 2011 at 6:21am

      I should add, he just stopped paying after a while.

      Report Post »  
    • loriann12
      Posted on September 1, 2011 at 6:48am

      I applied for a loan through Countrywide, and they told me I could afford much more house that I thought I could afford. They take on risky loans. I was smart, and bought within my budget. How many say, Oooh, I didn’t know I could get that much money? and then go on and get that bigger more expensive house, and then can’t make the mortgage?

      As for BofA, don’t they give loans to illegal aliens? no questions asked. We‘ll give you a national number so you don’t need a social security number, which they can’t get, unless they‘re Obama’s relative.

      Report Post »  
  • slvrserfr
    Posted on September 1, 2011 at 5:20am

    This is obvious and any investor can clearly see that in their horrible fundamentals in their balance sheet. The CEO recently said there was no need for them to raise capital, yet they sold a stake of their assets in China and Obama got Buffett to make a significant bid after even he himself sold off his stake in the company last December. Buffett insisted on having preferred shares that offer a set yield to give him incentive to hold on to the stake. That is how concerning the disposition of this bank is, considering they still carry a heavy burden of toxic assets from mortgage backed securities. They also said they would lay off 2,500 employees, that doesn‘t sound like a decision that would be made for a company doing well because it isn’t by any means.

    Report Post »  
  • kindling
    Posted on September 1, 2011 at 3:17am

    In 2004 I overheard a countrywide manager telling a customer the reason they were so busy writing so many loans is because the government wanted all the Mexicans to be able to buy homes in the central valley of California….now look at it. I know of some illegals that were able to buy a home for cash last year. Thank you Barney and DCBC.

    Report Post » kindling  
  • tckid17
    Posted on September 1, 2011 at 1:26am

    Warren and Jimmy Buffett to the rescue, “pour me something tall and strong, It’s $5 Billion somewhere”

    Report Post »  
    • db321
      Posted on September 1, 2011 at 2:28am

      They better bring a bunch of Robo Signers with them – Buffet is an idiot for listening to Obama. Obama sent Buffet like a sheep to slaughter. Warren you can kiss that 5 Billion good buy. A rattlesnake only knows how to do one thing – Bite.

      Buffet – While your writing Checks to BofA – would you kindly write one to catch you up on the back Taxes you owe. You Flake!

      Report Post » db321  
  • Skee
    Posted on September 1, 2011 at 12:41am

    Looks like another job for Uncle Sam’s check book
    and his trusted side kick Obama the boy Bolshevik.

    Report Post » Skee  
    • calijohn
      Posted on September 1, 2011 at 1:05am

      tarp was under bush’s watch, as i recall.
      b of a is a private enterprise that is too big to fail??

      Report Post »  
    • touch
      Posted on September 1, 2011 at 1:27am

      Many people who have great credit are opting to walk away from their BOFA mortgage in strategic default. All they care to preserve is their 1 credit card and they are taking their profession and earnings ability and moving on…

      Report Post »  
  • Slayer
    Posted on September 1, 2011 at 12:11am

    When BOA falls, I’ll think of Nelson pointing and going,
    HA HA!

    Report Post » Slayer  
  • johnj1952
    Posted on September 1, 2011 at 12:07am

    The small amount I carry on my credit card BETTER be paid on time or else the Banking police will make my modest credit rateing a credit disaster. Big banks big Money, Small guy or girl with a need for a credit card cant scew up BUT the big banks can, why is that?

    Report Post » johnj1952  
  • TH30PH1LUS
    Posted on August 31, 2011 at 11:59pm

    I left B of A many years ago, as soon as I heard about them lending to illegal aliens.

    Thank GOD for USAA! Love those guys! Best banking system I’ve ever worked with.

    Report Post » TH30PH1LUS  
    • calijohn
      Posted on September 1, 2011 at 1:13am

      gee.
      your concern about lending to illegals rings a bit hollow.
      b of a did what most other banks were – and are – doing to make a profit.
      are you in favor of E-verify?
      are you concerned that illegals are hired into jobs in this country?
      get into your congressperson’s face and see what the repubs and tea people will do about it.

      Report Post »  
    • Al J Zira
      Posted on September 1, 2011 at 7:08am

      @CALIJOHN: I agree with TH30PH1LUS. It’s not that BoA started “lending” to illegals, that assumes the bank get paid back. It also overlooks the fact that lending to illegals, while maybe not illegal, I’m not sure, it should be or at least makes for really bad business practice that jeopardizes other customers. The real problem is the majority of these loans came in the form of unsecured credit cards. Essentially the bank gave every illegal $5000 with no chance of ever getting paid back. Then they take TARP money because they’re in trouble. If you don’t see a problem with this you need help. I hope BoA goes under and wonder if this administration is hell bent on closing banks with “shady lending habits” why they haven’t closed down BoA?

      Report Post » Al J Zira  
    • johnnycatt
      Posted on September 1, 2011 at 7:52am

      wow, i can’t imagine how giving credit cards to criminals with no ID would NOT cause financial difficulties…

      Report Post »  
  • simply one voice
    Posted on August 31, 2011 at 11:48pm

    This is why fraudulent tax evader Warren Buffett is smooching O’s hinny, is in bed with B of A and planning on US taxpayers to bail them out, all the while he’s actually laughing his pompous assinine intellect into the oblivion of Hell before he next blinks his corrupted vain eyes.

    Report Post » simply one voice  
    • calijohn
      Posted on September 1, 2011 at 1:07am

      jealous much??

      Report Post »  
    • neidermeyer
      Posted on September 1, 2011 at 6:32am

      Why call “SIMPLY ONE VOICE” jealous ,, Buffet has profited over the last 40 years feasting on companies sold at fire sale prices due to inheritance taxes and such ,, he has been profiting on others that have been beaten down by the heavy hand of government … He is one of them,,, kissing Obamas butt has gotten him a piece of BAC ,, you can bet your last dollar he was given a personal guarantee from Obama that Obamas justice department would grease the way for BAC to continue foreclosing on property they don’t own.

      Report Post » neidermeyer  
  • TJexcite
    Posted on August 31, 2011 at 11:40pm

    What a great day it will be when “they” go after the banks and disrupt things.

    Even a bank got screwed when they wanted to buy on the cheep that ended up being not so cheap.

    Report Post » TJexcite  
  • PoliticalJunkieToo
    Posted on August 31, 2011 at 11:26pm

    Google

    Bank of America complaints

    (NOTE: There are literally millions of HORROR stories of what BOA does to its customers)

    Report Post »  
  • PoliticalJunkieToo
    Posted on August 31, 2011 at 11:25pm

    Bank of America is the ABSOLUTE WORST bank – EVER.

    I encourage any First Sergeants/Commanders in the military if they have a troop bouncing checks to ENSURE that troop gets OUT OF Bank of America if they are using BOA before throwing the troop out of the service. There are plenty of credit unions or banks (USAA) to go switch to.

    Bank of America LIES to active duty as to when their military paycheck is deposited. I met so many active duty who had the same experience as myself. If payday was on a Monday (non-holiday), you would be LUCKY if you say your money deposited by Wednesday or Thursday or even Friday. Bank of America is HORRIBLE.

    Taxpayers should NOT be bailing out Bank of America. Let it go out of business.

    Report Post »  
    • 1Wolverine
      Posted on September 1, 2011 at 12:09am

      Totally agree with you that BofA is horrible. After banking with them since ‘97, three years ago they just start charging all kinds of fees on my accounts. I would go in and complain about it and they would apologize and refund the money and the fees would be back the next month, one time the very next day. This went on for months with both my personal and business accounts. It was theft and nothing less. It just makes me wonder how many people have accounts that don’t watch their accounts closely and are being robbed by them. It’s like putting the wolf in charge of the hen house.

      So today, I finally made my own little bank run on BofA. They SUCK.

      Report Post » 1Wolverine  
  • Mateytwo Barreett
    Posted on August 31, 2011 at 11:06pm

    Gee! I hate a sad story!! So you buy a conpany that is involved with God knows what kind of schemes (but we do know you know about schemes!). And you got a bailout, Huh?! I didn’t get one- of course I wasn’t running an illegal check and debit scam nationwide either. Little tough to turn aprofit? Sux,doan it? Jack up yer ******** fees, and throw a few more regs on the people that have got like real ID’s. I know it’s tough , but I got faith that if any one company can make as many customer unfriendly advancements in customerscrewage, as you . .(Gosh! I hope that doesn’t read like a unhappy oooone time “pigeon”)!

    Report Post » Mateytwo Barreett  
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