Banks have been staggered by their losses on mortgage lending over the past four years.
The writedowns this year have been steeper than expected.
Hardest hit is Bank of America. Why? Because they bought Countrywide, the subprime lender, and Bank of America is still ruing that purchase as they try to clean up that mess.
Countrywide was lax with who it lent money to. It did not really care as it immediately resold its mortgages where it could.
Fierce and numerous new regulations from the Dodd-Frank bill make it even harder for banks to make money. Their viability is threatened. So what will the Obama administration do? Bail them out with stiff conditions.
Under Barack Obama, the federal government has taken an increasingly steep control of the economy.
Bank of America Corp., the largest U.S. lender, had the biggest costs, totaling $39.1 billion since the start of 2007, according to data compiled by Bloomberg. JPMorgan Chase & Co., ranked second by assets, followed with $16.3 billion, and Wells Fargo & Co., the biggest U.S. home lender, had $5.09 billion, the data show.
The costs have eclipsed predictions from bankers and analysts that lenders would suffer only modest damage from what Bank of America Chief Executive Officer Brian T. Moynihan has called “the mortgage mess.” Paul Miller, the FBR Capital Markets & Co. analyst, said costs for all banks could surpass $121 billion as the bill comes due for lax lending practices.