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Bank Of America To Slash 16,000 More Jobs

It's not easy being the most hated bank in America.

Moynihan steps up BofA job cuts: 16,000 more by Christmas.  The Wall Street Journal cites a document given to top management at the bank.  The newspaper says the cuts will mean fewer branches and a smaller mortgage operation.

All hail Ken Lewis and his brilliant decision to purchase Countrywide.

At one time Bank of America's megalomaniacal CEO Ken Lewis thought he was picking up Countrywide Financial for the bargain price of $2.5 billion.  Now with BofA's stock down approximately 70% since the takeover was struck in the Summer of 2008, the WSJ reports the deal has cost BofA $40 billion, and still counting.

"Obviously, there aren't many days when I get up and think positively about the Countrywide transaction," Mr. Moynihan said in August 2011.

"It is the worst deal in the history of American finance," said Tony Plath, a banking and finance professor at the University of North Carolina at Charlotte. "Hands down."

The total costs from Countrywide to date, according to people close to the bank, include $34.5 billion chewed up by a combination of consumer real-estate losses since mid-2008 and funds set aside to pay back investors who allege Countrywide wasn't honest about the quality of mortgage-backed securities it issued before the crisis. Additional legal costs from various settlements with federal and state agencies and the initial Countrywide purchase amount push total costs over $40 billion, these people said.

And the tally could go higher.

Here, in an invoice no M&A professional should ever want duplicated, is how Countrywide has cost Bank of America more than $40 billion:

$2 billion – Amount BofA paid for minority stake in Countrywide in August 2007.

$2.5 billion – Amount BofA agreed to pay to buy the whole company in January 2008.

$40+ billion – Total real estate losses, settlements with government agencies and amounts pledged to investors who purchased poor-performing Countrywide mortgage backed securities.

$67.5 million – BofA paid more than half of the settlement of a government fraud suit targeting former Countrywide CEO Angelo Mozilo in 2010.

$5 billion – Possible future losses that could be attributed to Countrywide.

68% – Drop in Bank of America’s share price since the Countrywide deal closed.


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Reader Comments (2)

Sep 20, 2012 at 1:43 PM | Registered CommenterDailyBail
What do you call 16,000 bankers buried up to their necks in sand?

A shortage of sand.
Sep 20, 2012 at 4:45 PM | Unregistered CommenterHarry Johnson

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