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In December 2007, I attended a dinner party hosted by Bank of America to promote the bank’s renewed partnership with Epiq Systems providing management and automated accounting programs for fidiciary accounts. I spoke with (then) CEO Ken Lewis of Bank of America about the proposed acquisition of Countrywide Financial, which had not yet been announced to the public. (At that time, BofA was heavily into fiduciary banking services that required a very high cash collateralization; and there was concern that the Countrywide deal would create an "impairment of capital" situation for the bank due to the large portfolio of at risk loans subject to "repurchase agreements" for securitized mortgages that had been traded by Countrywide on the financial markets.) Lewis was all for the deal (the bank was acquiring Countrywide at a "fire sale" price, and the bank already had a substantial equity position); however this was questionable considering just the losses already posted by the lender that would have to be absorbed. As it turned out, the acquisition of Countrywide was a big mistake resulting in huge losses in settlements with state and federal government agencies. Consequently, BofA was forced to downsize, closing hundreds of branches, cutting thousands of jobs, and eliminating many departments, including fiduciary banking services, which terminated October 2012. None of this would have happened if the government had exercised proper oversight.
In December 2007, I attended a dinner party hosted by Bank of America to promote the bank’s renewed partnership with Epiq Systems providing management and automated accounting programs for fidiciary accounts. I spoke with (then) CEO Ken Lewis of Bank of America about the proposed acquisition of Countrywide Financial, which had not yet been announced to the public. (At that time, BofA was heavily into fiduciary banking services that required a very high cash collateralization; and there was concern that the Countrywide deal would create an "impairment of capital" situation for the bank due to the large portfolio of at risk loans subject to "repurchase agreements" for securitized mortgages that had been traded by Countrywide on the financial markets.) Lewis was all for the deal (the bank was acquiring Countrywide at a "fire sale" price, and the bank already had a substantial equity position); however this was questionable considering just the losses already posted by the lender that would have to be absorbed. As it turned out, the acquisition of Countrywide was a big mistake resulting in huge losses in settlements with state and federal government agencies. Consequently, BofA was forced to downsize, closing hundreds of branches, cutting thousands of jobs, and eliminating many departments, including fiduciary banking services, which terminated October 2012.
None of this would have happened if the government had exercised proper oversight.
