This week Bank of America - make that *Ken Lewis' Bank of America* - announced some $20 billion in losses due to its savvy investment in Countrywide Financial.
Is this the same Countrywide that Ken Lewis' bank was raving about merely 2 years ago?
I'll enlarge the last line:
"THANK GOODNESS WE HAVE IT", i.e. Countywide!!!
And they said that, not only after OVER-PAYING for the subprime lender, but AFTER having many months to scrutinize the books.
Here's what I wrote/predicted 3.5 years earlier, in January 2008:
Ken is not simply paying $4 billion (on top of the $2 billion that already vanished); he is assuming the debt of a company whose liabilities exceed $120 billion. Even with a light recession and slightly higher Treasury rates, his gamble could easily cost BoA $20 billion!
How prescient am I!
And guess what....I'll predict ANOTHER $20 billion in Countywide Losses from here. Look, they lost all that money already and interest rates actually WENT DOWN. What's going to happen to these toxic loans when borrowing rates inevitably uptick???
Revisit my on-target prediction and enjoy one of my all-time most popular posts here:
Bank of America's Ken Lewis - Socialist Hero, Shareholder Villian
2 comments:
I read (recently, one of those flashing by articles) that BAC expects losses of up to $67 billion on it's real estate loan portfolio.
Arguably, the worst part is our redoubtable Fed is keeping them afloat with the ultra loose monetary policy.
Too big to fail, too effed up to succeed ...
BAC will lose hundred of billions before it's all said and done.
Another thing to watch is how the bank will try to attribute its massive organic banking losses to Countrywide and Merrill Lynch. Remember according to Ken they were *forced* into those mergers.
Too big...PERIOD.
We are suffering under a tyranny of *large institutions* in every facet of society.
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