Page 133 - Flip Banks TG

Introduction

Difficult History, Bright Future

Introduction

The Bank of America (BofA) made some serious mistakes

with its aggressive acquisitions of Merrill Lynch and

Countrywide Financial and possibly Le Salle during the credit

bubble and the subsequent financial crisis. Consequently,

for the best part of a decade it had been dealing with

financial, regulatory, and legal problems related to these

misstep acquisitions.

Since 2009, the U.S. economic recovery had lasted far longer

and pushed far higher than at first anticipated, and BofA

saw dramatic gains.

However, what at first sight appeared to be a strategic mis-
calculation of epic proportions burdening the company with

massive weaknesses and threats subsequently has been

turned into strengths and opportunities. Moynihan, CEO,

commented that over the last ten years:

“…….Vast losses from bad debt and litigation merely

obscured billions of dollars in operating profits. “We just had

to get rid of what was dragging us down.”” (24)

The real challenge and focus of strategic attention for BofA

and its leadership lay with Countrywide Financial. This

acquisition would prove to be toxic, where it cost the bank

$4 Billion for the troubled lender and loan servicer it

subsequently, paid over $91.2 Billion in penalties and fees,