...COUNTRYWIDE FINANCIAL: THE SUBPRIME MELTDOWN I. Problem Statement After buying out Countrywide Financial and resolving the issues against former CFO David Sambol and former CEO Angelo Mozilo, what should be the next steps that Bank of America must take to salvage Countrywide Financial from onslaught of criticisms and lawsuits that already arose and would potentially arise against it? II. Analyzing Case Data In the mid-2000, season where real estate prices were booming and confidence levels were high, even clients who could have qualified for regular loans chose to take out subprime loans to finance their real estates. Just like most businesses, Countrywide did everything to expand their profitability. They gave false assurance to home buyers. So, even consumers with good credit rating get attracted to these mortgages without fully recognizing the possible consequences. The construction industry also used flipping to expand its profit. Speculators also bought existing homes with no intension of keeping them, waiting until the value increases, and selling them at a profit. High demand also caused an increase of the cost of materials. Realtors, on the other hand, were motivated to push sales through because of commissions they could earn, pushing them to take much riskier transactions. Even real estate appraisers began to inflate the value of homes to ensure that loans would go through. Without being foreseen by anyone, US economy began to slow down. People started working...
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...Countrywide Financial was a major player in the subprime loan crisis that contributed to the 2008 financial crisis (Ferrell, Fraedrich, & Ferrell, 2015). Despite being such a major contributor to the financial crisis, there was little accountability for Countrywide, its executives, or the company that acquired Countrywide after its downfall. Federal prosecutors with the U.S. Department of Justice have recently decided to not continue pursuing charges against Bank of America, the company who acquired Countrywide (Morran, 2016). In 2014, a federal jury found that Bank of America was liable for violating federal law in relation to its mortgage related unethical behavior. The court ordered Bank of America to pay over $1 billion dollars as a result. However, an appeals court overturned the lower court’s decision based on a technicality regarding at what point Countrywide knew it would violate mortgage securities contracts (Morran, 2016)....
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...fall and the loss of many. The strategies of the Countrywide Financial were not effective and it seems that the management was not updating their strategies with the passage of time and was not keeping them up to date with the changing needs of this world. It will not be wrong to say that the failure was caused due to the negligence of the management. Not only the management but the regulatory bodies also have contributed to this collapse. The management should update its policies on timely basis and was giving loan to almost everyone while following its aggressive approach; it was the duty of the regulatory bodies to interfere. They must have good management strategies...
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...ETHYL CELLULOSE Ethyl Cellulose polymers are derived from cellulose. They inert, high purity powders with no caloric value and are virtually colorless, odorless and tasteless. According to the DOW films made from ETHOCEL (a brand name of Ethyl cellulose) polymers are highly flexible and retain their flexible and retain their flexibility at temperatures well below freezing. It is excellent as a film former. Films made from it are tough, with high tensile strength and unusual degree of flexibility even at low temperatures. It yields a greater volume of film-forming solids than any other cellulose derivative. It is compatible with most common plasticizers and polymers. It yields clear films with a wider variety of plasticizers and polymers and cellulose derivatives. It is also an excellent water barrier. In films it absorbs a little moisture either on exposure to the atmosphere or after long immersion in water. The good binding qualities of it are useful in applications such as tableting and microencapsulation. Its solubility dissolves in a wide range of solvents such as aliphatic alcohols, chlorinated solvents, and natural oils. It is practically insoluble in glycerin, propylene glycol, and water. In formulating with it other polymers are used to improve gloss, rubbing properties, adhesion, and resistance to certain solvents. Generally, the percentage of modifying polymer is approximately equal to that of the ETHOXYL polymer, and the amount...
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...As the of the financial core of the United States and even the world, the Wall Street always give public people a feeling that it is untouchable. After the financial crisis, not a single top Wall Street executive has been convicted and many people did not accept it. Why it happened? Should we blame weak laws, or did the U.S. Justice Department lack of effort? In public’s perspective, some leaders from Wall Street should take responsibility to this huge crisis. This Video “The Untouchable” is trying to investigated the inner reason of this phenomenon and let publics know more information behind this huge crisis. The video keeps asking the question again and again in the video: “why no criminal prosecution of Wall Street executives or major Wall Street firms for activities related to the financial crisis?” By listening the opinions from different groups such as due diligence, people from justice department or leaders in Wall Street, we can get deeper understanding of this crisis. Mistakes always give us chance to learn from it and we can learn a lot from this financial crisis, and there are three major learnings for me from this video. First, never loosen the standard of your company. This videos give us a bad example which is Countrywide Company. Greed driven them loosen their standard and give loan to every customer even they do not have ability to pay it back. The main reason of this huge financial crisis is many companies loosen their standard like Countrywide. Many customers...
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...The Bank of America - Capital Structure GB 550-01 Financial Management TABLE OF CONTENTS The Bank of America Abstract I. Introduction History of the Bank of America A. Corporate Structure B. Bank Ranking C. Impact from Recession II. Financial Markets A. Domestic Markets B. Global Markets C. Mergers and Acquisitions III. Capital Structure A. Growth Opportunities B. Business Risks C. Tax Position IV. Conclusion V. Summary VI. References Abstract This paper explores the turmoil the banking industry has faced during this current economic recession focusing primarily on the Bank of America, the role they played during the recession and their focus to conquer the global market to become the largest financial institution in the world. The Bank of America is operating in over 150 countries with over 6,000 retail banking offices and over 18,000 ATMs in the United States. During this recession, the Bank of America’s ranking fell considerable and were forced to lay off over 100,000 employees. The Bank of America operates offices in more than 20 global countries including Asia, Europe, the Middle East, Africa, Latin America and Canada. A critical move for the Bank of America is investing their attention to the growth of their overseas operations. Currently, the Bank of America owns a minority stake in China Construction Bank. The Bank’s interest in growing overseas is motivated by opportunities...
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...SUBSCRIBE NOW and Get CRISIS AND LEVIATHAN FREE! Subscribe to The Independent Review and receive your FREE copy of the 25th Anniversary Edition of Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Founding Editor Robert Higgs. The Independent Review is the acclaimed, interdisciplinary journal by the Independent Institute, devoted to the study of political economy and the critical analysis of government policy. Provocative, lucid, and engaging, The Independent Review’s thoroughly researched and peer-reviewed articles cover timely issues in economics, law, history, political science, philosophy, sociology and related fields. Undaunted and uncompromising, The Independent Review is the journal that is pioneering future debate! Student? Educator? Journalist? Business or civic leader? Engaged citizen? This journal is for YOU! SEE MORE AT: INDEPENDENT.ORG/TIROFFER SUBSCRIBE to the The Independent Review NOW and q Receive a FREE copy of Crisis and Leviathan OR choose one of the following books: Beyond Politics The Roots of Government Failure By Randy T. Simmons The Challenge of Liberty Classical Liberalism Today Edited by Robert Higgs and Carl Close Lessons from the Poor Triumph of the Entrepreneurial Spirit Edited by Alvaro Vargas Llosa Living Economics Yesterday, Today and Tomorrow By Peter J. Boettke q q q q q YES! Please enroll me with a subscription to The Independent Review for: q Individual Subscription: $28.95 / 1-year (4 issues)...
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...Governments with their banking, investing, asset management and other financial products and services 1. The company is headquartered in Charlotte, North Carolina. The company has huge presence in America spanning across 40 states. It serves approximately 54 million consumers in US and its foot print covers 80 % of the population. The bank is being led by Brian Moynihan who succeeded Ken Lewis as the President and CEO effective January 1, 2010. Some of the key highlights of Bank of America are: As of 2010, it is the second largest bank holding company behind JP Morgan Chase in United States by assets which stood over US$ 2 trillion As of 2010, the company is the fifth largest company in United States by revenue which is over 111.4 billion2 The company was also the 3rd largest non-oil company in the US after Wal-Mart and General Electric In 2010, Forbes listed Bank of America as the third largest company in the world 3 The bank has over 5500 branches along with approximately 16300 ATMs and an online banking with 30 million active users 4 The major competitors of Bank of America are JP Morgan Chase, Citi Group and Wells Fargo Bank. 1 http://www.forbes.com/companies/bank-of-america/ 2010 Bank of America Annual Report 3 http://www.forbes.com/companies/bank-of-america/ 4 http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol -homeprofile#fbid=W6HlSIbzfcd 2 4 Bank of America: Mobile Banking Case Report Financial Snapshot 5 Company History The company was founded originally as Bank...
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...Table of content I. Introduction to credit crisis and Bank CEO Incentives…………………….2 II. Other factors of credit crisis………………………………………………3-4 a) Housing bubble b) Interest rate and inflation c) Unemployment III. Conclusion…………………………………………………………………..5 IV. References……………………………………………………………………6 In my following essay, I will try to explain clearly about credit crisis and Incеntivеs оf Bаnk Chiеf Exеcutive officеrs are nоt mаjоr fаctоr in crеdit slump. At first, lets to еxplаin what are сredit сrisis and its rоle in еcоnоmy. Making a hard to obtain financing to debtors by shortening of funds in the credit market is called as credit crisis. It is because of limited assets obtainable for lending and the price for assets for borrowing are increases so fast. Creditors don’t want or can not to lend an asset again, because they meet to losses on previous loans. This is caused by non-payment by debtors and defaults on loans, which decreases their value. In this situation, banks are trying to recover expenses and to return all money that they lost by selling debt. Then, if prices fall, the bank suffers losses. They cannot borrow a huge amount of funds if capital reduces. Also, if the banks take on more risk in the market, they will increase interest rates on loans to reward for this risk. It will bring to increasing the price of borrowing, but also will bring to decreasing the borrowers. In general, reducing the liquidity of capital and reducing...
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...Introduction: The financial crises are major disruptions in financial markets characterized by sharp declines in asset prices and firm failures (11). The global melt down of 2007-08, the Great Depression of 1929 and South Asian crises of 1997 tested the efficiencies of concerned regulatory authorities across the world. Financial crises moves like cyclone and spirals down to all connected economies (13). Whether financial crises emerges in the developed countries or in the developing countries, the history witnesses that it has invariably led concerned economies into deep recession, unemployment, loss of public confidence, domestic and international trade reversal and even capital flight. The regulatory authorities engaged in watching and monitoring health of concerned economies have to proactively respond to mitigate and resolve the crises. There could be different causes for financial crises such as ongoing double digit inflation / uncontrolled monetary expansion, unsustainable internal or external public debt, excessive credit booms, large capital inflows, large current account deficits, balance sheet weaknesses due to maturity mismatches of public debts, fall out of impracticable exchange rate mechanism followed and currency crises (3). The selection of ways and means of mitigating and resolving a financial crisis and accelerating economic recovery is dependent upon root causes leading to financial crises. The policy options selected by regulatory authorities may be...
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...government privatized the 3 largest banks in the country (The banks borrowed $120 million – 3 times the size of Iceland’s economy) c. American accounting firm KPMG audited Iceland’s banks and found nothing wrong. American credit rating agencies gave Iceland’s banks the highest possible credit rating. d. When Icelandic banks collapsed at the end of 2008 unemployment tripled in 6 months and many people lost their savings. e. 1/3 of Iceland’s financial regulators went to work for the banks. II. How the Crisis Happened f. In September 2008 the bankruptcy of Lehmann Brothers and the collapse of AIG led to the onset of the financial crisis which doubled the U.S. national debt and rendered 30 million people unemployed g. The crisis was not an accident ii. Since the 1980s the financial industry has caused more and more severe crises even as the industry has made more money iii. After the Great Depression the U.S. had 40 years of economic growth without a single financial crisis, partly because investment banks were private institutions owned by partners and they were conservative with investments because if their investments went bad the partners lost money h. In the 1980s investment banks went public, providing them with huge amounts of stockholder money and people on Wall Street started getting rich iv. In 1981 Ronald Reagan chose Donald Regan, CEO of Merrill Lynch, as his Treasury Secretary...
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...ENTERTAINMENT, FINANCIAL SERVICES | | SBI Superstars present a production of Group 2’s analysis on the specified industries. | | Tajuan K. Griffin – ChairMarcus Bourgeois – Co-ChairArica McCullumMichael LatsonRicardo CopelandDavid BercklerAyokunle Ojutalayo Ifeanyi Korie Karen JohnsonRobensky Theodore | 7/21/2010 | | ------------------------------------------------- Table of Contents Table of Contents………………………………………...…………………………………….pg 2 Project Overview………………………………………………………………………………pg 4 Computer Industry pg 5 Hardware Overview………………………………………........................................................pg 6 Hardware Top 5 Financials…………………………………………………………………….pg 7 Hardware Top 5 Analysis………………………………………………………………...........pg 8 Software Overview...................................................................................................................pg 12 Software Top 5 Financials……………………………………………………………………pg 13 Software Top 5 Analysis……………………………………………………………………...pg 14 Computer Industry Outlook…………………………………………………………………..pg 15 Consumer Goods Industry pg 16 Consumer Goods Overview......................................................................................................pg 16 Consumer Goods Top 5 Financials…………………………………………………………...
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...progress made so far. Finance and Economic Development Minister Patrick Chinamasa shares some of the achievements made towards meeting the ideals of the national blue-print. While insisting the economy is on the right path towards recovery, he also captures highlights on progress from mega deals signed between Zimbabwe, China and Russia recently. “As you may all be aware, the Zim-Asset framework covers a number of issues across well defined clusters. We need reliable infrastructure and a strong production base in order to achieve sustainable development,” he told Parliament last week. “Further, confidence in the financial services sector is central to the achievement of Zim-Asset goals. The financial system plays an important intermediary role that involves mobilising domestic resources and efficiently channelling them into productive activities. Financial sector confidence is enhanced when the Central Bank is empowered to play its proper role.” Implementation of mega...
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...I. Executive Summary Our project contains a detailed and comprehensive financial analysis of two companies in the banking industry. A main goal of our work was to accurately compare these two companies in a variety of ways and determine which company would be better to invest in. Barclays is a British based company that operates under the International Accounting Standards (IAS) while the U.S. based Bank of America operates under U.S. Generally Accepted Accounting Principles (GAAP). We examined the effects these different standards had on the two companies. We then gathered information from Barclays and Bank of America’s consolidated financial statements and used this information to calculate various ratios needed for analyzing the two companies. In addition, we compared similarities and differences between Barclays and Bank of America in relation to how they disclose and deal with various accounting and reporting issues. These issues include disclosure of employee information, disclosure of foreign operations, the valuation and disclosure of intangible assets, and numerous others. We also took the foreign currency exchange rates into account and examined the impact it had on Barclays as well as Bank of America. II. History Both Barclays and Bank of America have a history of great service, and being one of the premier banks of England and the United States respectively. It is impressive that Bank of America can be looked at as the equivalent of Barclays when it...
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...FIN 6406 A Financial Ratio Quarterly Trend Analysis of : Wal-Mart WMT Listed on New York Stock Exchange Liquidity Liquidity ratio measures the financial health of the company for the payment of short term obligation. Current ration is a general and quick measure of liquidity it represents margin of safety or cushion available to creditors. It is the index of company’s financial stability, technical solvency and strength of working capital. Quick ratio eliminates the inventories from current assets it is beet measure of liquidity. Good current ration accompanied by low quick ration indicates disproportion of high investment in inventories. Net working capital is conversion cycle of the company that is used to purchase material and convert in to finished goods and then in return get money form the customer from the sale of product or services. Cash rations is the percentage of cash available to payoff the liabilities. Current ration is much less than standard. Company has more current liabilities as compare to currents assets this ratio is not satisfactory. Further this is below than industry average. Company has the declining trend in the liquidity category. Liquidity of the company is much less as compare to industry average for the recent trend. This shows liquidity performance is poor as compare to other organization. Age of the creditors is greater than the age of the company debtors and unable to pay off current obligation quickly that is due to working capital...
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