Bank of America needs another $34 billion on top of the $45 billion they accepted in TARP funds; is this company really going to survive?
When we look back on the demise of Bank of America much of the blame can be placed on the acquisitions of Countrywide and Merrill Lynch. Countrywide was as deep in the subprime mortgage crisis as you could get yet Bank of America thought that they should just buy this mortgage lender outright. Bank of America already had a large stake in Countrywide but they should have never made the commitment to purchase the company as a whole.
Countrywide was the lending mortgage lender in the western part of the United States which is where the subprime mortgage reared its dirty head. Many of the loans that they were giving out were to people who had no business getting a loan for one third of the amount they received. The idea of giving irresponsible individuals the opportunity to take out a $300,000 loan is just ridiculous. This was happening every single day in California, Arizona and Nevada.
When you combine all of this subprime exposure to the acquisition of Merrill Lynch, there is a HUGE problem brewing for Bank of America. If individuals cannot afford to pay their mortgage, how are they going to pay for financial advice. The irony of it all is that the financial advice that Merrill Lynch was providing was the exact opposite. The CEO was spending $80,000 on an area rug for his office; what kind of financial advice is that?
Ultimately, the future looks very bleak for Bank of America. Was it the subprime mortgage crisis that brought this company to their knees? I sure thing so, along with some very bad financial decisions.
Subprime Blogger offers information on subprime mortgages and how they brought down some of the biggest financial institutions. If you want to know the truth about subprime loans make sure to check into Subprime Blogger to find out the truth
