Friday, January 11, 2008

What Bank of America Was Thinking

I was on the inside of Bank of America for a while as a consultant. I signed a deal that said I wouldn't talk about anything I overheard for three years but it has been much longer than that and I am sure that my thoughts are generally old news. Nonetheless I think they are worth sharing.

Bank of America was heavily investing in Consumer Real Estate, thats what they call mortgages, when the subprime boom hit. The goal at The Bank, was to streamline the entire haphazard process of mortgage application and underwriting. In particular they wanted a single computer system that could automate the entire process. In the past there had be a hodge podge of different systems and departments that did everything from taking applications, to verifying income and assets, to making sure the house wasn't in a flood zone.

The idea here, and behind a lot what The Bank, was doing was that consumer banking was about information. Their real asset was that the mortgage application let them stick their noses in all of your nitty gritty financial information, which they could then use to sell you every product under the sun.

In particular a few key executives were really into this notion that The Bank could be a conduit for every imaginable service related to a home. Bank of America could arrange your lawn service, your pool service, your home security service, everything you wanted. And since, they knew so much about you they could figure out exactly what you wanted.

It was the fees on these service that were going to be real winners. So, what is The Bank getting when they buy Countrywide? They are getting the largest mortgage servicer in the country and access to lots of homeowners whom they plan to sell lots of other stuff to as well.

My concern, however, is this - Bank of America looks so responsible because they didn't really dip into the subprime waters like other banks. My feeling, however, is that this is because they already had a big project going when subprime came along and they didn't want to muddy the waters with this new poorly understood stuff.

However, The Bank is heavily into credit cards, which are going to be the next take a hit. The Bank also is taking on a lot of servicing responsibility with Countrywide. To the extent that
not just subprime but Alt-A and even adjustable rate prime mortgages start to go delinquent, The Bank is going to be responsible for advancing interest payments to the investors in those loans. That is a heck of a liquidity responsibility. I would like to hear more about how The Bank would fare if prime ARM delinquency rose substantially.

10 comments:

Anonymous said...

banish tonsil stones -
bookmarking demon -
burnthefat -
burn the fat -
carb rotation diet -
catch spouse cheating -
cb affiliate blueprints -
combat the fat -
conversationalhypnosis -
conversational hypnosis -
cure angular cheilitis -
directory of ezines -
dirty talking guide -
dish tv for pc -
dog training online -
domain sales machine -
driver robot -
earth4energy -
earth 4 energy -
easy tech videos -
eatstopeat -
eat stop eat -
error killer -
error smart -
evidence eraser -
evidence smart -
fatburningfurnace -
fat burning furnace -
fatloss4idiots -
fat loss 4 idiots -
fitnessmodelprogram -
fitness model program -
fit yummy yummy -
flattenyourabs -

Anonymous said...

flatten your abs -
flat to fab -
forex derivative -
gas 4 free -
get better grades -
golf swing guru -
governmentregistry -
government registry -
heartburn no more -
homemadeenergy -
home made energy -
hyper vre -
i software tv -
legit online jobs -
linden method -
london forex rush -
master word smith -
maternityacupressure -
maternity acupressure -
max pro system -
meet your sweet -
membership gold rush -
minute sites -
musclegainingsecrets -
muscle gaining secrets -
negative calorie diet -
one minute cure -
one week marketing -
pc on point -
pc tv 4 me -
perfect optimizer -
php link cloaker -
pick the gender of your baby -
profit lance -

Anonymous said...

public records pro -
quit smoking today -
recipe secrets -
reg clean -
regi cleanse -
registry easy -
registry winner -
reg sweep -
reverse mobile -
reverse phone detective -
richard mackenzie direct -
rocket piano -
rocket spanish -
satellite tv to pc -
smtp 2 go -
spam bully -
spyware nuker -
the bad breath report -
thedietsolutionprogram -
the diet solution program -
the stop snoring exercise program -
the super mind evolution system -
trading stock indices -
truth about abs -
turbulencetraining -
turbulence training -
twitter annihilation -
twitter rockstar -
twitter traffic machine -
ultimate content creator -
ultimate font download -
ultimate wow guide -
video piggy -
vincedelmontefitness -

Anonymous said...

vince del monte fitness -
warp speed fat loss -
web investigator -
win clear -
win spy -
yeast infection no more -






3d covers -
500 scrapbooking sketches -
acid alkaline diet -
acne free in 3 days -
advanced pc tweaker -
apple patch diet -
art of approaching -
auction inspector -
av advance -
build a nice store -
burnthefat -
burn the fat -
carb rotation diet -
catch spouse cheating -
chikara reiki do -
combat the fat -
conversationalhypnosis -
conversational hypnosis -
copy that game -
cure gout now -
dl guard -
dog training online -

Anonymous said...

driver checker -
driver robot -
drop shipping wholesalers -
earth4energy -
earth 4 energy -
easy backup wizard -
eatstopeat -
eat stop eat -
error fix -
error killer -
error smart -
evidence eraser -
evidence nuker -
ex girlfriend guru -
fatburningfurnace -
fat burning furnace -
fatloss4idiots -
fat loss 4 idiots -
final uninstaller -
fitnessmodelprogram -
fitness model program -
fit yummy yummy -
flattenyourabs -
flatten your abs -
flat to fab -
forex grid bot -
get google ads free -
get paid to draw -
get this off my chest now -
governmentregistry -
government registry -
heartburn no more -
homemadeenergy -
home made energy -

Anonymous said...

honest riches -
learn photoshop now -
linden method -
malware removal bot -
marketing on the fringe -
maternityacupressure -
maternity acupressure -
meet your sweet -
musclegainingsecrets -
muscle gaining secrets -
my online income system -
negative calorie diet -
no adware -
one minute cure -
one week marketing -
online pickup secrets -
partenon -
pc on point -
perfect optimizer -
perfect uninstaller -
pick the gender of your baby -
power cash secret -
profit lance -
publicrecordspro -
public records pro -
push button marketer -
quit smoking today -
registry easy -
registry easy download -
registry fix -
registry winner download -
reverse mobile -
reverse phone detective -
richard mackenzie direct -

Anonymous said...

rocket spanish -
rss power plus -
sem business blueprint -
silent sales machine -
spam bully -
sports betting champ -
spyware cease -
spyware nuker -
spyware remover -
starting a day care center -
the bad breath report -
the cb code -
thedietsolutionprogram -
the diet solution program -
the super mind evolution system -
traffic travis -
truth about abs -
turbulencetraining -
turbulence training -
twitter affiliate cash -
twitter decoded -
video piggy -
video web wizard -
vincedelmontefitness -
vince del monte fitness -
warp speed fat loss -
wedding speech 4u -
windo fix -
your bill killer -
you will get paid -
zygor guides -
20 day persuasion -
advanced pc tweaker -
adware bot -

Anonymous said...

affiliate naire -
apple patch diet -
article submitter -
art of approaching -
burnthefat -
burn the fat -
carb rotation diet -
cold sore freedom in 3 days -
conversationalhypnosis -
conversational hypnosis -
copy that game -
cure for bruxism -
cure hemorrhoids -
cyber link pro -
dl guard -
driver checker -
driver robot -
drop shipping wholesalers -
earth4energy -
earth 4 energy -
easy backup wizard -
easy click mate -
easy photo biz -
eatstopeat -
eat stop eat -
epinoisis -
error fix -
error killer -
error smart -
evidence nuker -
fap turbo -
fatburningfurnace -
fat burning furnace -
fatloss4idiots -

Anonymous said...

fat loss 4 idiots -
final uninstaller -
fitnessmodelprogram -
fitness model program -
fit yummy yummy -
flattenyourabs -
flatten your abs -
flat to fab -
governmentregistry -
government registry -
heartburn no more -
hippo jaw -
homemadeenergy -
home made energy -
honest riches -
hot video squeeze templates -
instant website creation -
jump manual -
keyword research pro -
linden method -
malware removal bot -
maternityacupressure -
maternity acupressure -
meet your sweet -
micro niche finder -
musclegainingsecrets -
muscle gaining secrets -
muscle gain truth -
my traffic strategy -
nasty dirty money -
negative calorie diet -
no adware -
pc optimizer pro -
perfect uninstaller -

Anonymous said...

pergola plans -
pick the gender of your bady -
plr ebook club -
pregnancy without pounds -
profit lance -
publicrecordspro -
public records pro -
questions for couples -
quit smoking today -
ready made review sites -
reg genie -
registry easy -
registry easy download -
registry winner -
registry winner download -
retrievea lover -
reverse mobile -
richard mackenzie direct -
rocket italian -
rocket spanish -
roulette sniper -
rss ground -
secret affiliate weapon -
secrets book -
spam bully -
spyware cease -
spyware nuker -
spyware remover -
spy zooka -
starting a day care center -
tattoo fever -
team idemise -
the bad breath report -
the cb code -