Lace up your gloves, bond investors: Bank of America is embroiled in “day-to-day, hand-to-hand combat” with anybody who wants money back on poorly assembled mortgage securities, according to CEO Brian Moynihan.
Speaking at an investor conference, Moynihan vowed to get rough with Fannie Mae, bond insurers and others who’re irate with BofA for selling them potentially faulty mortgages. The CEO also said that BofA would not be spending investor money “unwisely.” Bank of America has vowed to go through its paperwork loan by loan in an effort to fight threatened legal actions by its customers.
For all the weighty responsibility BofA has undertaken on behalf of shareholders, there was still room to attribute current headaches to someone else. The bank is trying to distance itself from Countrywide Financial, the mortgage giant it bought in 2008 amid rumors of bankruptcy.
“At the end of the day, we’ll pay for the things that Countrywide did,” Moynihan said. We’ll say: the Congressional Oversight Panel now estimates the putback price tag at $52 billion and advocates more stress tests for the major banks to establish the risks. The increased regulatory scrutiny is unlikely to leave investors cheering anytime soon, whether BofA wins the fight it’s picked with clients or not.
mtaylor [at] observer.com | @mbrookstaylor