Bank Of America’s Profits Down 37.5 Percent From One Year Ago
Higher costs were generated by law suits with borrowers who accused repossessing homes without having the right paperwork. The mortgage business is having trouble and this is why the Bank of America is further behind.
Also JPMorgan, the second largest US bank said it suffered very high losses on mortgage related issues in the first quarter.
The Bank of America does business with one of every two U.S. households. As results are closely tied to the health of U.S. consumers, the Bank of America is also not doing very well. The bank is trying to fix the situation by cutting costs and selling more products to retail consumers. During the economic crisis the bank has received two government loans that are already repaid. The biggest mistake was the purchase of mortgage lender Countrywide Financial Corp in 2008. A this gave the bank more mortgages, home equity loans and other assets that lead to big losses.
In order to fix this situation the bank also made several leadership changes. Bruce Thompson, its chief risk officer, will become chief financial officer by the end of the second quarter. The current CFO, Charles “Chuck” Noski, will become vice chairman of Bank of America. Noski took over as CFO in May 2010 and lives in California, although he intended to move to Charlotte.
The largest U.S. bank reported net income of $2.0 billion, or 17 cents per share, compared with $3.2 billion, or 28 cents per share ,in the same quarter a year ago.11