Tuesday, March 8, 2011

Amazing: Bank of America 's New 'Bad Bank' to Contain Half of Its Mortgages!

This is amazing, about half of Bank of America's mortgages are being placed into a "bad bank".

BAC is separating almost half its 13.9 million mortgages into a "bad bank". This bad bank will contain the riskiest and worst-performing “legacy” loans, according to Terry Laughlin, who is the new unit's boss.
Laughlin told investors at a meeting in New York  that "we are creating a classic good bank, bad bank structure,” 

“We’re going to get after this, we’re going to do it the right way and we’re going to put it to bed in the next 36 months,”.

Are they trying to make people focus on the "good bank" as if the "bad bank" will go away? How can a bank get away with this?

The bad bank portfolio will include loans that are currently 60 or more days delinquent, as well as riskier types of loans such as subprime, Alt-A, interest- only and option adjustable-rate mortgages. The portfolio will be completely split by March 31 and will be liquidated over time.

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