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Bank Of America To Pay $20 Billion To Settle Crappy Mortgage Investments
By
Christopher Robbins
Published Jun 29, 2011
Modified Jun 29, 2011
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By
Christopher Robbins
Published Jun 29, 2011
Modified Jun 29, 2011
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Bank of America is expecting to eat $20 billion in losses stemming from the bank's dealings in the subprime mortgage crisis several years ago. Investment firms, who bought portions of debt based on a raft of dubious mortgages thanks in part to BOA's acquisition of shady lender Countrywide, had demanded reparations after the bubble burst. Last fall, CEO Brian Moynihan challenged the investors' attitude of, "I bought a Chevy Vega but I want it to be a Mercedes," and told shareholders that he was going to "protect" them and engage the investors in "hand-to-hand combat." Sure, BOA might have lost $20 billion, but you shoulda seen BlackRock Financial's shiner!
Now it appears the fighting rhetoric is gone, and the move is part of a campaign of CEO Brian Moynihan to "move past the mortgage crisis." Reuters reports that despite the expected loss, shares of the bank were up 3 percent today, and that can absorb the $20 billion thanks to the $67 billion it has in available capital. BOA's move now puts pressure on other banks, like JPMorgan Chase and Wells Fargo to clean their own mortgage messes up. "Our job is to eliminate risks to allow this company to go forward." BOA is not out of the weeds yet thanks to then-Attorney General Cuomo's lawsuit, but the market doesn't seem concerned about the bank's future. In other words: $20 billion is simply the cost of doing business.
Tagged
Bank of America
countrywide
economy
mortgages
subprime mortgages
underwater mortgages
wall street
Christopher Robbins
Christopher Robbins is a New York City reporter covering transportation, affordable housing, local politics, and criminal justice. His work has also appeared in New York Magazine, The Village Voice and The New York Times. Chris is a graduate of Patrick Henry High School in Roanoke, Virginia, and enjoys biking to Fort Tilden in the summertime.
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