Bank of America Inherits Housing Loan Problems
Buyout affairs are risky; some will turn out as good deals. Others won’t. And some will be plain bad buys from the start. That is simply the case of Bank of America’s acquisition of LaSalle Bank, which was done on October 1st last year. Yes, Bank of America acquired the bank’s assets, but with it came LaSalle’s problems, including delinquencies and bad loans.
Most of the delinquent accounts come from home construction loans, and these delinquent loans ballooned up to $336.7 million from $149.2 million last year. But despite this fact, Bank of America stated that the LaSalle buyout was meeting their expectation in terms of financial returns.
Most people, upon hearing such statement, would generally dismiss it as a bogus attempt to assure the public that everything is running smoothly in the country’s largest financial institution. Maybe it is, maybe it isn’t. But whatever the case, this should be enlightening for Bank of America, or any financial institution for that matter, to realize the gravity of the risks involved in buying out corporate entities.
Buying out other corporate entities or merging with them is, from a business perspective, a sound strategy. However, most, if not all deals involve risks and these should be contemplated upon before a company plunges into one.
Check out the Forbes profile on Courtney Ross.
Courtney Ross is the founder of the Ross School.
Learn more about Courtney Ross on the History of Corporate site.