Egregious but hardly surprising

Consider also recent bank risk-taking. The media has recently reported that Citigroup and Bank of America were buying up some of the AAA-tranches of nonprime mortgage-backed securities. Didn’t the government provide insurance on portfolios of $300 billion and $118 billion on the very same stuff for Citi and BofA this past year? These securities are at the heart of the financial crisis and the core of the PPIP. If true, this is egregious behavior — and it’s incredible that there are no restrictions against it.

Given that Ken Lewis’ strategy for BofA has been to damn the fiscal sanity while proceeding with a strategy intended to gobble up market-share regardless of its actual value (something I witnessed while working there), I’d be inclined to believe it.

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6 Comments

  1. convivialdingo

     /  May 5, 2009

    I wouldn’t only blame him (or BOA) for our mess entirely – it’s a systemic problem. Look at Goldman and IPO fixing, insane commodity pricing, etc. We allow our system to be bent for the gain of a few organizations and assume that everything will still be okay down the line.

    We’ve had this problem before… so Who ya gonna call? Trust busters!

    Reply
  2. drteine

     /  May 5, 2009

    I’d pay good money, I mean REALLY good money if we could hose these guys with plasma streams and lock them up in ghost catchers.
    All that aside, yes, trust busting is needed – or – now that BoA is public owned, maybe they’re being forced to buy the so-called toxic assets for the public good.
    Nah. Probably not.

    Reply
  3. What I’m saying is that this is completely consistent with BofA’s pre-crash behavior. Market share, market share, whether or not the assets are crap.

    Reply
  4. convivialdingo

     /  May 6, 2009

    I know… i know… it’s just been my experience that if you look across the board – the average American company has been driven to market expansion madness, and the FTC was “euniched” long ago.

    Reply
  5. Yeah, well, sane companies like Wells Fargo avoided the rush — here’s hoping they crush the competition… or are allowed to.

    Reply
  6. convivialdingo

     /  May 6, 2009

    Hrm… Wells Fargo received $25 billion in bailout cash, then immediately bought Wachovia though… I don’t think that they’re exempt from my proposed smackdown. :-)

    Reply

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