Bank of America is banking on amnesia.

Bank of America is going to be buying Countrywide Mortgage and it's sub prime loan portfolio. Of course they think they can make money eventually with this deal. The head of Countrywide certainly will. Here is the money quote:"In a written statement yesterday, House Financial Services Committee Chairman Barney Frank (D-Mass.) said Mozilo, "who will be profiting from this transaction personally," should "donate a substantial portion of the $150 million he has collected over the last several years to nonprofits and other institutions that are helping us deal with the problem he helped to create."
I'm sure Bank of America also has it's bases covered too. If things go sour they can just call up their lobbyists in Washington to get the U.S. taxpayers to bail them out. After all Bank of America is one of the banks that give credit cards to illegal immigrants. Now this always sounded like a pretty nutty idea to me since these customers are known to have broken U.S laws already. Yet Bank of America wants them as customers. Here let Bob explain it and see if it makes sense to you:

You can take this to the bank.

" NEW YORK, Nov. 4 -- Citigroup has installed former Treasury secretary Robert Rubin as chairman after the widely anticipated resignation of Charles Prince, the embattled chairman and chief executive who faced mounting criticism in the wake of a $6.5 billion write-down for the third quarter.
After an emergency board meeting Sunday, Citigroup, citing significant declines in the value of subprime-related securities in the past month, estimated that it would take additional write-downs of $8 billion to $11 billion." - Washington Post



How could this have happened? Just because the banks had tapped out America's middle class and started giving out subprime loans to people who had no ability to repay them. That seems like an ok business practice. I mean when they give out a $650,000 mortgage to an illegal immigrant making $18,000 a year. What could go wrong? Adios Citibank, Hola Bank of America.

A whole lotta shaking goin on!

You can almost hear the sound of shaking newspapers all over the country as the financial workers read things like this in the Washington Post:

"The turmoil in the U.S. credit markets turned global Thursday, prompting central banks in Europe and the United States to pump more than $150 billion into the financial system to keep it operating smoothly."

Looks like the financial Homer Simpsons forgot that if you give loans to people who have extremely low credit ratings, illegal immigrants and others who are barely able to make payments that maybe it might just be a house of cards. You can almost hear them say "Doh!" as they sit in their offices in Manhattan looking at the numbers. Like Homer Simpson these "masters of the universe" are coming to the realization that they are not as smart as they think they are and are looking for someone to save their butts:
"U.S. stocks suffered their second-worst decline of the year as the cost of borrowing for corporations continued to rise and some investors urged policymakers to help."

Been there done that. It was called the "savings and Loan Bailout". Not with my tax dollars you don't.

Memo: To my mutual fund managers

Skip lunch today and make sure the portfolio you manage comes out ok. This is why I am paying those fees remember? As for me I will be taking Warren's advice. That is Warren Zevon not Buffet:

"I think it's important not to get sidetracked from the immediate goal of having a really pleasant afternoon."
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