Thank You Bank Of America

One more thing. Every taxpayer should thank Bank of America for buying Countrywide and Merrill Lynch. Bank of America was a well capitalized bank before making those ill fated acquisitions, having completely escaped the subprime debacle. Since then they have used up a lot of their built up equity and have raised over an additional $50 billion in capital in order to fund losses from those purchases. Had the government had to bail out Countrywide and Merrill the losses would have been in the hundreds of billions of dollars. Not to mention the TARP gains the government saw from Bank of America.

The government encouraged Bank of America to merge with these insolvent entities. They should not be suing them for the sins of Countrywide and Merrill Lynch. This is almost as ridiculous as the government suing Ally, which is owned by the government. So its the government suing themselves. Is this a stimulus plan for out of work lawyers?

6 comments:

Anonymous said...

You mean the same Bank of America which issued itself billions in profits to it's top employees in 2009 who bailed ship and started hedge funds after Dodd frank.. the same BAC which shut down branches and fired tens of thousands of lay workers during the same time management were feasting on record bonuses.  No thanks.

Matthew said...

It is true that BAC took over Merrill and Countrywide with the encouragement of Paulson and Bernanke, but the fact remains that executives of BAC continue to commit thousands of mortgage-related crimes, including various species of foreclosure fraud.  And this includes the pre-Merrill and Countrywide portions of BAC.  BAC has a far more pervasive criminality problem than Arthur Andersen or Enron or Worldcom ever did.

Tsachy Mishal said...

Some shortcuts were taken in foreclosures but for the most part people who deserved to be foreclosed on were. There are a few cases where mistakes were made. Makes for good headlines about the evil banks but there is little substance there.

A said...

I fail to understand why BAC does not put its Countrywide sub in bankruptcy to get out from under the huge mess that Countrywide has been. That should not only stop the hemmorhage but also void/diminish the government's lawsuit for all practical purposes.

Tsachy Mishal said...

It would likely be a disaster for credit markets but the mere threat might force those suing them to settle as long as the threat is credible.

A said...

Those that bought Countrywide debt (now BAC sub debt) probably bought it for pennies on the dollar. They'll recoup part or may be most of it in bankruptcy. It'll at least stop BAC balance sheet from further deterioration plus the bankruptcy judge will likely throw out all lawsuits, including government's, as there would be no assets to go after once debt holders are paid at least in part.