According to Standard & Poorâ€™s, the top U.S. banks could face up to $31 billion in losses from buying back bad mortgages. Bank of America Corp and JPMorgan Chase & Co have the most exposure to such potential repurchase obligations, followed by Wells Fargo & Co, Citigroup Inc, US Bancorp and PNC Financial Services Group, according to S&P analyst Vandana Sharma. In partcular, analysts believe that Bank of America has lost so much credibility with investors that the stockâ€™s decline might start feeding on itself.
- According to the article, what percentage of losses from mortgage buybacks have the six companies already accounted for?
- Besides the losses, what reason do analysts propose will lead to decreases in net interest income?
- Based on Weilâ€™s article, how did Bank of America record the transaction when it purchased Countrywide?Â
- Rewrite Weilâ€™s 1st paragraph after the â€œTipping Pointâ€ subtitle, in simple terms, as if you were explaining it to your grandmother or your roommate.
Staff. (2010). Banks Face $31 Billion Loss on Mortgage Buybacks: Report, Reuters, November 8. (Retrievable online at http://www.huffingtonpost.com/2010/11/04/banks-face-31-billion-los_n_779115.html)
Youtube.com (2010). BofA Under Pressure to Buy Back $47B in Debt (Retrievable online at http://www.youtube.com/watch?v=apMyLwOJ7nU)
Weil, J (2010). Bank of America Edges Closer to Tipping Point: Jonathan Weil, Bloomberg News, Nov. 3.