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Things are not so good at the Banks

monsoon

By monsoon
in Charlotte

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monsoon Gigalopolis

monsoon

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^BofA invested $2B in Countrywide a year ago. Long before there was talk of BofA taking over the company. The bank was hoping to strike it big with this investment. They couldn't have been more wrong.

The self proclaimed "bank of opportunity" ought to have been asking some serious questions on what Countrywide was doing to people's opportunities before forking out this kind of cash.

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monsoon Gigalopolis

monsoon

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^So where did the $2B go? You don't think that CW used this money to keep making bad mortgages? Mortgages that have caused two states to file lawsuits against them?

This really isn't a question on if BofA might eventually make a lot of money by profiteering off the misfortunes of people. They may very well do so. It's a question of how low they might go to make a $.

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swh1972 Hamlet

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If BAC bought the shares from CFC, or if CFC issued new shares, then, yes, they would use that money to finance their operations - otherwise, the money goes to whomever was holding the shares that BAC purchased. But I highly doubt that mortgages originated in the third and fourth quarter of 2007 are the driving force behing the lawsuits in Illinois and California. CFC had at best, shady controls over who they lended to and that is the main issue here. And this goes back several years, long before BAC got involved.

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monsoon Gigalopolis

monsoon

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On an unrelated note, apparently now BofA considers credit card payments to something like a governmental parking meter, a cash advance and will slap the individual with a $10 minimum charge. I wonder if this would include the LYNX ticket machines?

Read more here about an individual that had to pay $12 for a $2 meter.

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swh1972 Hamlet

swh1972

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Not good. This seems to be the case with a number of Banks - these types of fees are also tacked on if you purchase lottery tickets with a credit card (which I am OK with), but for a $2 parking meter, jeez.

I don't think you would have the same issue with a debit card, but I am not certain.

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lukedog Whistle-Stop

lukedog

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Jim Cramer, a talking head on NBC (mostly business matters) mentioned on MSNBC this morning the potential disappearance of Wachovia. It was an off the cuff remark but one that seems to echo the same speculation posted here.
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monsoon Gigalopolis

monsoon

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Wachovia has decided to end its practice of offering of negative amortization loans. These are loans where the payment does not cover the interest on the loan and as a result the homeowner ends up owing more on the house each month instead of the other way around.

The banking industry in general has profiteered by making mortgages confusing, so they can tack on $1000s in unnecessary fees, so many people who ended up with these kind of loans had no idea this was what was going on with their loan. It's one of the reasons there are so many defaults on home mortgages because when people find out their house is worth less than the loan, they will often walk away.

I honestly don't see the difference between this kind of profiteering vs that of a loan shark in the back street offering loans to poor people they can't pay back and often with dire consequences. There was once a time when one could expect at least a fair deal from their bank, but IMO these kinds of things are why the banks are in so much trouble now as it has blown up in their face.

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Charlotte_native City

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I honestly don't see the difference between this kind of profiteering vs that of a loan shark in the back street offering loans to poor people they can't pay back and often with dire consequences. There was once a time when one could expect at least a fair deal from their bank, but IMO these kinds of things are why the banks are in so much trouble now as it has blown up in their face.
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Andyc545 Burg

Andyc545

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So it's official... effective today, Ken Thompson's replacement has been found. Robert Steele was a former US Treasury Dept Official. How do you all feel this will impact the short term and long term for Wachovia, and do you believe having some stability after a month of no head chief that things will turn around for the bank without being forced with a buyout?

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dxartist Hamlet

dxartist

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So it's official... effective today, Ken Thompson's replacement has been found. Robert Steele was a former US Treasury Dept Official. How do you all feel this will impact the short term and long term for Wachovia, and do you believe having some stability after a month of no head chief that things will turn around for the bank without being forced with a buyout?
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monsoon Gigalopolis

monsoon

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I amazes me that these two banks, First Union and NCNB, had the business sense to manage to grow from 2 small regional banks to the top 5 largest in the country in less than 3 decades, then turn around and make phenomenal bets on non-traditional mortgage business and now come close to losing it all because of it.

When you think about it, they had to take down some big long established banking brands in this country during their extraordinary rise, and that did not happen due to being ignorant about the finance business. Yet despite that, they somehow didn't see this coming and have now exposed themselves greatly to a real estate market that should have never gone to where it went. It's absolutely breathtaking to watch what they have gotten themselves into.

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Raintree21 Town

Raintree21

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I amazes me that these two banks, First Union and NCNB, had the business sense to manage to grow from 2 small regional banks to the top 5 largest in the country in less than 3 decades, then turn around and make phenomenal bets on non-traditional mortgage business and now come close to losing it all because of it.

When you think about it, they had to take down some big long established banking brands in this country during their extraordinary rise, and that did not happen due to being ignorant about the finance business. Yet despite that, they somehow didn't see this coming and have now exposed themselves greatly to a real estate market that should have never gone to where it went. It's absolutely breathtaking to watch what they have gotten themselves into.

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atlrvr Metropolitan Area

atlrvr

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I would think its much easier to grow rapidly when you are small, but when you are big, there aren't as many options to keep the growth going. Shareholders however want to see growth, so to satisfy this, they took bigger risks.

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jednc Burg

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Did they have the same leadership then as they do now though?

Hugh McColl has been gone for seven years now. He was the key person in building BOA into what it is now.

Ken Thompson has been there for a while so I don't really have an excuse for them.

What about the BOD's? Have they changed much in the past decade?

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