$107 Billion: Bank of America’s Full Cost of Toxic Mortgage Policies

When Bank of America bought Countrywide Bank for $2.5 billion in 2008, it inherited Countrywide’s infamous toxic mortgage policies.

By 2011, the Wall Street Journal reported that the acquisition had already racked up $20.6 billion in charges related to Countrywide’s shady mortgage practices:$8.5 billion to investors, $5.5 billion into a defective-mortgage payback fund to cover future claims, and $6.6 billion in various other costs.

And now there’s more bad news for the company’s shareholders: a $16.65 billion settlement with the Justice Department over the Countrywide mortgages. And let’s not forget the legal bill, now around $70 billion, not to mention the possibility of criminal prosecutions.

In short, Countrywide’s disgusting practices have now cost Bank of America over $107 billion: more than 50 times the acquisition price.

Lessons to businesses:
1. Business ethics is a lot cheaper than predatory practices
2. Be very careful when you buy toxic “assets” that turn out to be big liabilities

I’ve been making the case since at least 2002 that green and ethical business practices are more profitable than crooked ones. If you’d like to know more, please pick up a copy of my . It’s been on the best-seller list at least 32 months, so I guess people find it pretty useful.

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A lifelong activist, profitability and marketing specialist Shel Horowitz’s mission is to fix crises like hunger, poverty, racism, war, and catastrophic climate change—by showing the business world how fixing them can make a profit. An author, international speaker, and TEDx Talker, his award-winning 10th book, Guerrilla Marketing to Heal the World, lays out a blueprint for creating and MARKETING those profitable change-making products and services. He is happy to help you craft your messaging and develop profit strategies. Learn more (and download excerpts from the book) at http://goingbeyondsustainability.com