Will we eventually see more consolidation in the banking industry? The two bank giants were hurt pretty badly in today’s sell off. There is some talk that Bank of America might split and move its bad mortgages and much of what’s left of Countrywide in to a separate company, i.e. a bad bank – I suppose a toxic waste dump of financials if you will. Word is that at some point that will likely end up on the backs of the U.S. taxpayer. That way BAC could continue to function as a normal banking entity if there is such a thing in the future.
I am not one to say who will survive…certainly I thought CITI was going out of business a couple of years ago when all of this unraveled, but they have kept the company going despite the challenges in the mortgage business and real estate. Some believe TARP was just a cover for the banks and has kept them from failing. Perhaps they are in a stronger financial position than I originally believed them to be.
- As Bank Of America Tanks, Spokesman Insists: We Do Not Have To Raise Capital (BAC) (businessinsider.com)
- Bank of America’s No Good, Very Bad Day (dealbook.nytimes.com)
- Bank Of America Is Just The Start Of Paulson’s Problems: Behold…. Citigroup (zerohedge.com)