Quote:
Originally Posted by pauldun170
From what I recall...prior to the buy out BOA had its hands clean of the mortgage mess. They bought Countrywide because it was a good deal (it has paid off for them and in the long run was a good buy)
Countrywides issue was they were kings of the "give mortgage to anybody" and then sell the loans off. In the end...they could dump them anymore and were stuck with them.
I guess the reality of it is that taking ownership (of the debt/obligations) would only work with smaller banks. Stringent lending practices without the pressure to turn the mortgage business into a cash cow.
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That is why I put the "by extension BoA" part. BoA was in good shape but they didn't buy Countrywide because it was a good deal, they bought them because the government begged (some allege threatened) them to. It was a horrendous deal and took BoA from being financially healthy to being one of the largest recipients of TARP.
Smaller banks haven't faired much better. This is a list of banks that have failed in the 2000s along with when they failed. Notice the list is almost exclusively small banks. There is no reason given for the failure of each bank but I think it is safe to say mortgages played a large role for the majority of them.
http://www.fdic.gov/bank/individual/.../banklist.html