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Thread: B.O.A. did not issue sub-prime loans

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    Default B.O.A. did not issue sub-prime loans

    Whenever discussing the causes of the current financial crisis, conservatives are always blaming the government for forcing banks to make risky loans to unqualified people. Well, it seems that Bank of America decided in 2001 to get out of the sub prime mortgage business because it was too risky. As a result, Bank of America is in relatively good condition financially. Nobody forced them to make any loans that they thought were too risky. This completely contradicts the conservatives' claim that the government was forcing banks to make these risky loans. Looks like it was the banks' decision to make these loans, not the government. If Bank of America could choose not to make these risky loans, there is no reason why other banks couldn't have made the same decision.

    http://www.cbsnews.com/stories/2008/...44_page2.shtml

    "It's said that one of the main reasons the [Bank of America] is doing well is because of your decision not to get into sub prime mortgages," Stahl said.

    "In 2001, my first year as CEO, we decided that we just didn't like the business. It was too risky. And so we decided to get out of it."

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    Default Re: B.O.A. did not issue sub-prime loans

    Yeah, BB&T is also very conservative, and they are doing better than a lot of banks. They are regional thought.
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    Default Re: B.O.A. did not issue sub-prime loans

    And BoA stepped out of the profits. No way was everyone gonna do that.

    Everyone deserves blame, banks, big business, idiotic people, the government, no one is blameless.

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    Default Re: B.O.A. did not issue sub-prime loans

    B of A has their OWN loan loss problems, although admittedly they skirted much of the 'subprime' mortgage issue. If you will recall, B of A pioneered the 'illegal immigrant credit card'. Now that the poor economy and stepped up ICE enforcement has caused many Mexican illegal immigrants to return to Mexico, B of A doesn't have a prayer of collecting !!!

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    Default Re: B.O.A. did not issue sub-prime loans

    Quote Originally Posted by Melonie View Post
    B of A has their OWN loan loss problems, although admittedly they skirted much of the 'subprime' mortgage issue. If you will recall, B of A pioneered the 'illegal immigrant credit card'. Now that the poor economy and stepped up ICE enforcement has caused many Mexican illegal immigrants to return to Mexico, B of A doesn't have a prayer of collecting !!!
    Comparative peanuts compared to sub-prime loan losses. A bigger problem is trying to digest Merrill Lynch and all their problems.

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    Default Re: B.O.A. did not issue sub-prime loans

    Quote Originally Posted by Melonie View Post
    B of A has their OWN loan loss problems, although admittedly they skirted much of the 'subprime' mortgage issue. If you will recall, B of A pioneered the 'illegal immigrant credit card'. Now that the poor economy and stepped up ICE enforcement has caused many Mexican illegal immigrants to return to Mexico, B of A doesn't have a prayer of collecting !!!
    How was B of A able to skirt the subprime mortgage issue if the government was requiring banks to make risky subprime loans? If B of A could avoid the crisis by not issuing risky loans, other financial institutions could have avoided it too. It was primarily the fault of the financial institutions for making the risky loans, not the government. If the government was forcing banks to make these loans, B of A would not have been able to decide to forgo these types of loans.

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    Default Re: B.O.A. did not issue sub-prime loans

    ^^^ from a 'community relations' point of view, a bank offering TIN based credit card accounts to minority / inner city residents gained some de-facto 'immunity' in regard to potential community organization objections at CRA hearings - which could in turn limit the bank's ability to expand. From that standpoint, B of A was a pioneer at skirting the home mortgage loan aspect.

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    Default Re: B.O.A. did not issue sub-prime loans

    Even Greenspan acknowledges the problem lies with an unregulated free market.

    http://crooksandliars.com/nicole-bel...nspan-shrugged

    I made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such as they were best capable of protecting their own shareholders.

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    Default Re: B.O.A. did not issue sub-prime loans

    ^^^ there is a big difference between shareholders (particularly the shareholders of common stock vs preferred stock) and bondholders. In general, regular folks (and their pension plans) were stockholders ... and thus saw their share value massively decline. On the other hand, in general the bondholders are the mega-rich ... who through no coincidence saw the value of their bonds upheld by the injection of gov't bailout money !

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    Default Re: B.O.A. did not issue sub-prime loans

    Explanation is needed here...

    Bondholders are contractually owed interest by the owners of the company and that comes before the stockholders' dividends. Stockholders are part owners in the company, and are essentially paid their part of the profits LAST as dividends. And finally some profit is retained is cash equivalents as retained earnings. The last two are a balance based on stockholder support vs working capital the company needs to operate.
    Last edited by threlayer; 10-31-2008 at 07:10 AM.
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