To those paying attention to Bank of America's recent rush of bad news, you may be wondering if the fallout will smack you in the face, especially since the company is headquartered here and all up in Charlotte's everything.
Well, Reuters thought of that. In a recent article, they broke down what Merrill Lynch customers can expect, what shareholders can expect, what average, everyday customers can expect, and more.
Here's a snippet:
IF YOU ARE A BANK OF AMERICA CUSTOMER
On the surface, Bank of America would seem, like Merrill Lynch, to fall into what Waymire calls the "too big to die" bracket. It serves about 58 million consumer and small business relationships with approximately 5,700 retail banking offices, 17,800 ATMs and an online banking system with 30 million active users, according to bank statistics.
Yet it also has one big, fat albatross on its balance sheets: Countrywide Financial. Bank of America acquired Countrywide for $4 billion, a deal that has proven a huge headache not just in dollars and cents, but in terms of the bank's reputation. "Basically all the mortgages that Countrywide produced from 2004 to 2007 were excrement," Geracioti says. "The question is: What are Bank of America's liabilities from Countrywide? Some say $100 billion, others say, 'Who knows?' The liabilities could be ginormous. The government is hassling the bank in a big way."
Bank of America has long held that Countrywide's problems were it own doing. But on September 2, the Federal Housing Finance Agency sued 17 firms - including Bank of America and Countrywide - for violations of federal securities laws in the sale of mortgage-backed securities. In an 88-page filing, the FHFA alleges that around 2005, top executives of Countrywide - which it labels as a "notorious mortgage lender" for its practice - "complained to each other at the time that BOA's appetite for risky products was greater than that of Countywide."
What does all of this mean for customers? Layoffs could impact customer service, but chances are the bank will pull out all of the stops to keep your business, which may include slashing your mortgage rate or extending any existing credit lines, assuming you have excellent credit scores.
Read the entire article, by Lou Carlozo, here.
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