Is BofA becoming "too big to fail" (bankruptcy, loans, complaint)

[renter07]

I ask this 'cos BofA is making another big acquisition with the stock purchase of Merrill Lynch without adequate due diligence.
2004 - FleetBoston
2005 - MBNA
2007 - LaSalle Bank
2008 - Countrywide, Merrill Lynch
Is BofA taking on too much risk? Is taxpayer going to bail it out 'because suddenly it will become too big to fail'. Should there be limits on how big these banks should grow by acquisition?

[cobolt]

I think another poster said that Bank of America is literally becoming the Bank of America. It will probably end up as the only banking (read socialist banking) institution.

[Donn2390]

Duplicate thread...

[renter07]

Originally Posted by Donn2390

Duplicate thread...

Not quite. That thread was hijacked by complaint about the bank. I'm addressing this in the current economic context.

[Wirelessany1]

Originally Posted by renter07

I ask this 'cos BofA is making another big acquisition with the stock purchase of Merrill Lynch without adequate due diligence.
2004 - FleetBoston
2005 - MBNA
2007 - LaSalle Bank
2008 - Countrywide, Merrill Lynch
Is BofA taking on too much risk? Is taxpayer going to bail it out 'because suddenly it will become too big to fail'. Should there be limits on how big these banks should grow by acquisition?

There are limits as to how big a bank can get. The five acquisitions here cannot be lumped into one category. Merrill Lynch is an investment bank. MBNA was credit cards; Countrywide is predominantly mortgages. Fleet and LaSalle were actual banks.

Bank of America had little to no presence in the areas where Fleet and LaSalle were based. The bank may be able to take on a few more very small banks in areas where there is no presence but I don't thing can grow much larger in so far as deposits.

BofA has a very strong, solid and balanced balance sheet. It is one of the few banks "in the black".

BofA is not in a position to obtain much if any of the taxpayer bailout because BofA did not make any of those exotic home mortgages. Wamu did and see what has happened to them. Where BofA took a hit is on the investment in mortgage portfolios that contained these bad loans originated by other lenders.

As much as people squabble about BofA (either you love them or you hate them), they have very solid lending practices in both the consumer and the commercial worlds.

I'm not saying that BofA has not had its trouble; what I am saying is that when it comes to these tough economic times you really need to look at a company's balance sheet to see its strengths and weaknesses. Take a look at BofA's for yourself and make your own determination.

I know how safe my money and investments are, do you?

take care, ana

[Grainraiser]

Originally Posted by Wirelessany1

There are limits as to how big a bank can get. The five acquisitions here cannot be lumped into one category. Merrill Lynch is an investment bank. MBNA was credit cards; Countrywide is predominantly mortgages. Fleet and LaSalle were actual banks.

Bank of America had little to no presence in the areas where Fleet and LaSalle were based. The bank may be able to take on a few more very small banks in areas where there is no presence but I don't thing can grow much larger in so far as deposits.

BofA has a very strong, solid and balanced balance sheet. It is one of the few banks "in the black".

BofA is not in a position to obtain much if any of the taxpayer bailout because BofA did not make any of those exotic home mortgages. Wamu did and see what has happened to them. Where BofA took a hit is on the investment in mortgage portfolios that contained these bad loans originated by other lenders.

As much as people squabble about BofA (either you love them or you hate them), they have very solid lending practices in both the consumer and the commercial worlds.

I'm not saying that BofA has not had its trouble; what I am saying is that when it comes to these tough economic times you really need to look at a company's balance sheet to see its strengths and weaknesses. Take a look at BofA's for yourself and make your own determination.

I know how safe my money and investments are, do you?

take care, ana

This is spot on. B of A has deep pockets and can buy these other institutions at cut rate prices.

[cdelena]

BOA has been limited in its bank acquisitions in recent years because the Comptroller of the Currency has a rule that any single bank cannot hold more than 10% of the nation’s deposits. As a result they have been looking at other financial institutions to buy. They are very sound and reasonably conservative so issues are not anticipated.

[veg8]

Originally Posted by renter07

I ask this 'cos BofA is making another big acquisition with the stock purchase of Merrill Lynch without adequate due diligence.
2004 - FleetBoston
2005 - MBNA
2007 - LaSalle Bank
2008 - Countrywide, Merrill Lynch
Is BofA taking on too much risk? Is taxpayer going to bail it out 'because suddenly it will become too big to fail'. Should there be limits on how big these banks should grow by acquisition?

BOA was pretty much too big to fail once they bought Fleet. Of all the megabanks they have best balance sheet, Citibank on the other hand is not so solid.

[Philosophizer]

I still think their acquisition of countrywide will lead to their bankruptcy.

[rcarrillo]

A few people said Bank Of America is conservative and didnt make risky mortgages. While that was true, their purchase of CountryWide pretty much ended that line of reasoning.

With CountryWide, they took tons of sub-prime, A- and Option ARM loans that might not be worth anything. Merril Lynch is also a big unknown... so there are two big risks that might lead to rewards or more implosions.