According to the Financial Times: B of A, aka Big and Apathetic, is about ready to dump $425 Billion in troubled home loans. This in order to "resole problems" related to its purchase of Countrywide Financial. B of A plans on doing this over three years. Guess who's holding those loans for close to 30 years? You and I are. Remember WesCorp? Remember how much they invested in Countrywide? Remember how NCUA sold off the future cash flow of those loans? Remember how we are holding the principle balance? Remember how they said the eventual losses will be between $11 Billion and $16 Billion? We are about ready to find out how much of that "stuff" WesCorp purchased. Let's see how the "tranche warfare" worked out for the financial wonder boys. I'm curious if the shoe will drop on cu's in this go-around of shedding loans, or will it come when B of A addresses the remaining $425 Billion in bad loans?
Amazingly, B of A is only addressing 1/2 their troubled loans here. It seems that they are worried about the banks overall performance and that waiting may "tarnish" the reputation of Brian Moyniham, it CEO. Tarnish his reputation? Really? What positive reputation could he possibly have at this point? The key word there was PERFORMANCE. You see, the real reason was the impact these loans have on bonuses. I wonder how many B of A big wigs are paid multi-million bonuses and are still upside down on their home loans? How ironic would that be?
We actually need this action by B of A and a few others. We won't start a true recovery until the housing market is addressed. It's kind of like watching the doctor bring out a big needle. You know you'll be better for taking the medicine, but you just don't want more pain!
Our first dose of medicine is coming up soon. Let's just hope it cures us, not kills us.
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